Scale is not a choice for business survival

Seth Godin asked recently, “Why scale?”, with his response implying that scaling may not be in the best interests of customers, that you may not choose to scale if you want to provide the best service to your customers.

Seth is wrong that scale is a choice. Scale – growth – is not a choice if you want to stay in business.

Consider these two charts. First, the Consumer Price Index from the Bureau of Labor Statistics, which shows in which calendar months prices increased for the consumer:

With only a few notable exceptions, prices for the consumer – for our customers – increase every month.

Second, the Producer Price Index from the Bureau of Labor Statistics, which shows in which calendar months prices increased for businesses, for companies that do business with other companies:

We see above a similar story: on average, prices increase.

If you intend to stay in business, you must grow. You cannot simply remain static. You cannot just do what you’ve always done and never change. Even if you had no competition, you would still feel the economic pinch of inflation eroding your profits, weakening what your dollar can buy. Your costs always increase. To just stay where you are, your revenues must at least keep pace.

Do you need hockey-stick growth? Do you need to scale exponentially? Not necessarily. But you do need to add products, hire people, and increase distribution just to outgrow inflation, just to stay in business.

Growth is not a choice. Growth is an imperative if you want to survive. Your customers may not care how quickly you scale, but your customers do care about you continuing to provide the goods and services they want, and you can’t do that if you go out of business.

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