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6 Reasons Why Small Businesses Stop Growing

6 Reasons Why Small Businesses Stop Growing | Why Businesses Fail

Small business owners often ask us why businesses stop growing, especially when they run into hard times themselves.

Running your own business is full of ups and downs, and it is important to be prepared for tough times.

You will probably face challenges such as reduced sales and poor cash flow, which can force your business to stagnate. If you are currently in this situation, it could be worth speaking to a business expert to help get you back on track.

However, the easiest way to deal with small business challenges is to avoid them altogether. So, why do businesses fail?

Let’s take a look at what causes businesses to struggle, and how you can stop them from happening to you.

Here are 6 reasons why businesses stop growing.

  1. Lack of a business plan

When starting a new business, having a business plan is crucial. You will likely rely heavily on your business plan during the setup and early stages of your business.

However, as your business grows and you get stuck into the day-to-day activities, it is easy to forget about your business plan.

It is best practice to keep going back to your business plan. You should be updating it at least yearly, as your business structure and goals change.

Not only that, but you should be reviewing it monthly to keep track of your growth and make sure that you are on track to hit your goals.

Having an updated business plan gives you a great measure for future performance and a blueprint of how to achieve your goals.

Without it, it is easy to go about your business aimlessly and not consider the bigger picture, which can cause your business to stop growing.

If you are unsure how to write your business plan, download our free business plan template:


  1. Poor cash flow management

It takes money to make money, and poor cash flow can really hold your business back.

You can expect there to be some delay between paying out and being paid, but the success of your business can hinge on how long the delay is.

Every industry is different, with some manufacturers working on 180-day pay cycles and other businesses that receive cash on delivery.

However, the core principle is the same.

The faster you are paid, the better your cash flow. Better cash flow means you’ll have more money at your disposal, which you can then use for investing in growth and expanding your business.

Poor cash flow can be a significant factor in why businesses stop growing. You need to make sure you are doing what you can to improve your cash flow and collect debt when payments are late.

Cash flow forecasting is a great way to start improving your cash flow. Cash flow forecasting will give you better clarity over your business’ future, and help you make better decision making.

This will give you a competitive advantage over other businesses who are lacking this level of insight, and will ultimately improve your cash flow.

Cash flow forecasting can be made user friendly, with programs like FUTRLI that we use to help our client’s business improve.

6 Reasons Why Small Businesses Stop Growing - FUTRLI

If cash flow is a big problem for your business, it might be worth getting a business loan so you can still take on a great business opportunity that you come across.


  1. Failure to identify new opportunities and markets

When you find something that works for your business, you may begin to autopilot. You know what to sell, your market and your expected revenue.

But what happens when things go wrong?

New trends and changes in the market can happen at any time, and it is important that you keep an eye on what’s happening.

Running your business can be extremely stressful and time-consuming, and it is understandable that you want to focus on your business.

However, if you spend all your time in the business, it doesn’t allow you much time to work on the business. Make sure you are lifting your head out of the trenches and looking for new opportunities and markets that may arise.

Here are a few tips for identifying new business opportunities and markets:

  • Think about how you could innovate your product to gain an edge on the competition
  • Consider what other industries could need your products
  • Look at other markets, especially interstate and overseas
  • Diversify your business and develop an entirely new product or solution

Making big changes to your business can be daunting and create additional complications. However, if the opportunity is there, it might be the key to ensuring your business’ future success.

If you are looking to move into a new market, talking to an experienced business advisor is a great first step.

  1. Costly and time-consuming manual processes

As a small business owner, you likely have software and processes that you always use and have become a part of how you run your business.

But is there a better way?

There are lots of great tools out there to help you run your business more smoothly, and you probably waste a lot of time using inefficient methods.

For example, by switching to cloud accounting software, you could save a ton of time on your bookkeeping. Time that could then be used to focus on more important things and help you grow your business.

Similarly, businesses often stick with the same software and processes that worked for them in the beginning but are not suitable long term. As your business grows, what you need to make it run efficiently and effectively also changes.

Consider what areas of your business you could improve, and look at what options are out there.

Improving your productivity with time-saving software could save you lots of valuable time, which can be spent focusing on growing your business.

If you are looking to improve your efficiency, you can speed up your processes with Workflow Max. This will allow you to manage your workflow while tracking time and costs, so you can find more time for other tasks.

6 Reasons Why Small Businesses Stop Growing - WorkflowMax

  1. Not taking your business online

“At least 40% of all businesses will die in the next 10 years… if they don’t figure out how to change their entire company to accommodate new technologies” – John Chambers

Consumers buy things differently than they use to, with more turning to the internet to make their purchase decisions or even their purchases.

Check out these statistics for our internet consumption and shopping trends in Australia.

Digital Transformation

Source: Your Digital Transformation Journey by Social Force.

Without joining in on the online conversation and promoting your business in this forum, you are missing out on a huge opportunity.

If your competitors are successfully growing their businesses online, you may find that your business begins to stagnate in turn.

Taking your business online might be the key to getting your business back on track and helping you succeed in an online dominated market.

  1. Not focusing on customer service

Businesses can get too caught up in the day-to-day routine of their operation and forget that without the customers, there is no business.

Whether it’s finding new customers or servicing existing ones, customer service is an essential part of growth.

It is a good idea to try and get feedback from your customers, to see if they had any difficulties with the process and how you compare with competitors.

Providing a great experience for your existing customers will help your business grow even if you are struggling to find new ones. It is easier to retain existing customers than to find new ones, so focus on making them happy.

Providing good customer service can also help generate new customers, so make sure you have a smiling face at the front of your business.

If you want to improve the customer service skills of your team, check out The Ultimate Guide to Training for Customer Service & Support.


We hope these tips can help you continue to grow your business, or turn things around if you are in a slump.

When your successful business stops growing, it can be hard to figure out what is wrong and how to fix it.

If you need to diagnose your business, speak to our team of business advisors. Book a free business consultation for one hour of expert, no obligation advice to get back on top.