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Dr. John Psarouthakis
, Executive editor www.BusinessThinker.com and entrepreneur of the year awardee.

You probably relish the challenge of seeing how far and how fast you can grow. Growth can be an exhilarating experience and public recognition of growth accomplishments abound. Most honor rolls of business, such as the Fortune 500 and Inc. 500 base selection on sales or sales growth.

But beware. So much hoopla accompanies rapid sales growth that the question of profitability may go unexamined until major problems set in. My experience confirms the critical point that growth alone does not guarantee profitability or long-term survival–and can actually spell disaster if improperly managed.

The case of an auto parts supplier entrepreneur highlights this point. At one point in his firm’s meteoric growth, he received many local, state, and national awards honoring his accomplishments, including Entrepreneur of the Year.

He had not put basic control systems in place. Lack of control took its toll on profits and the firm struggled for survival. Fortunately, the CEO did some reading on other fast-growth firms, including a case written about L. L. Bean in Maine, and identified his unmet needs. He hired several full-time experts to install the necessary systems.

For several years following, his firm remained an industry profit leader and eventually merged with another successful computer retailer.

But he still remembers the irony of receiving so many awards when his business was in such serious financial trouble and cautions the aspiring entrepreneur to beware the hubris that comes with that first Honor Roll award.


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