One viable option of a business, is to coast. Coasting, in my definition, is the time when the owners of the business decide that they would rather NOT grow, and would like the business to stay at a certain size. By size, I imply the number of employees instead of dollars of sales.
The reason for thinking in terms of employees, is that the business complexity increase as the number of employees increase – hence there is a pivotal point in a business where a business must change the way it operates once the number of personnel gets larger. In my experience, a number of employees beyond 20 requires a significantly different way of management, and further a number above 80-100 also triggers a significant transition.
And so, when a company choose to ‘coast’ the goals of the company become:
- optimization of operations – efficiency
- Stability
- Low employee turn over
Operational efficiency becomes possible, since a company that is NOT in a growth mode does not need to deal with as much change as a company in growth mode. Change tends to be expensive and time consuming, and inefficient – since as with anything new (which change implies) there is a learning process.
So, a company that is coasting – can focus on getting the profitability stable, costs lowered and infrastructure strong.
In a coasting company low employee turn over becomes possible. As a company grows, its needs change – and as it is often, the people often cannot grow with the needs of the company. And as such, as the company grows, and changes – the staff is likely to depart as it is not able to adapt.
In a coasting company, the rate of change is much less – the individuals in the company are not asks to change as much or as often. They are able to settle in and remain in their comfort zone.
The beauty with a coasting company is that it is much less intense (less stressful) than growth. It can provide a strong source of revenue, especially since the business can be strongly optimized. A coasting company can be prepared for M&A – and while the management is not focused on growth – it can focus on finding an MA partner.