1) The document analyzes growth patterns of 19 fast-growing companies in New England that experienced over 60% sales growth between 2003-2007. 2) It identifies four typical growth patterns: Rapid Growth, Incremental Growth, Episodic Growth, and Plateau Growth. 3) The study finds that three key factors influence company growth across the different patterns: management, marketing, and money. While not every factor was critical for each company, every entrepreneur cited the importance of each factor at some point during their company's growth.

1. Pathways to entrepreneurial growth: The influence
of management, marketing, and money
Candida G. Brush a,*, Dennis J. Ceru a
, Robert Blackburn b
a
Babson College, The Blank Center, Wellesley, MA 02457, U.S.A.
b
Kingston Business School, Kingston University, Kingston-upon-Thames, Surrey KT2 7LB, UK
1. The challenge of growth
At the beginning we decided, ‘‘All right, let’s
give ourselves 10 years here. In 10 years, if it
doesn’t work, we will have amassed enough
experience to sort of go back in and grab a
job someplace else.’’ So we just hit 10 years and
in some ways it is still a puppy with big paws,
but I think we have a clear idea of where we
want it to go now. We’ve learned how to grow
the company, learned how to get through the
downturns.
–—Advertising and design firm
Right now we’re struggling to get the thing built
and costs are still high in the construction
Business Horizons (2009) 52, 481—491
www.elsevier.com/locate/bushor
KEYWORDS
Entrepreneurial
growth;
Patterns of growth;
Management decision-
making;
Growth strategies
Abstract Business growth is considered a worthy goal for firms and a measure of
entrepreneurial success, as well as important for economic development. Why some
firms grow and others do not, though, remains a subject of debate. Of the small
proportion of firms that do grow, it is often assumed that they follow a similar growth
trajectory and/or encounter certain stage thresholds; however, the evidence base on
this is wanting. The new study of business growth presented here provides an in-depth
analysis of 19 New England-based firms. Our findings reveal that fast-growing compa-
nies exhibit different rates and patterns of growth: some display rapid growth
trajectories (Rapid Growth Pattern); some, slower, more measured rates (Incremental
Growth Pattern); others, episodic periods of quick growth followed by sharp retrench-
ment (Episodic Growth Pattern); and, while no firm actively chose to stop growing,
some reached points of stagnation (Plateau Growth Pattern). We found that three key
factors–—management, marketing, and money–—affected company growth across
these patterns. While not every factor was critical at each moment of growth for
each firm, every entrepreneur cited the relative importance of each factor at some
time during the growth of their firm. Thus, fast-growing firms do not grow in the same
manner, at the same rate, or with the same outcomes. This article has implications for
those seeking to understand the processes of development and patterns of fast-
growth businesses.
# 2009 Kelley School of Business, Indiana University. All rights reserved.
* Corresponding author.
E-mail addresses: cbrush@babson.edu (C.G. Brush),
dceru@babson.edu (D.J. Ceru), r.blackburn@kingston.ac.uk
(R. Blackburn).
0007-6813/$ — see front matter # 2009 Kelley School of Business, Indiana University. All rights reserved.
doi:10.1016/j.bushor.2009.05.003

2. business. We need to continue to explore merg-
ers and acquisitions with other organizations,
try to find compatible strengths in broader
marketplaces, or find new strengths in existing
marketplaces, new leadership. We’ll look for
smaller firms to buy because it is expensive to
buy firms, and I’m not sure that we’re quite
ready, willing, and able to make that invest-
ment. We’ll merge with like-minded organiza-
tions if we think we can triple the value
proposition, not double it.
–—B2B services firm
Growth is generally agreed upon as a worthy goal
for most firms. It is widely celebrated in the media–—
consider, for example, the Top 100 Inc. 500/5000
Companies; the Fortune 100 Fastest Growing Com-
panies; and so forth–—and is considered a measure of
entrepreneurial success (Davidsson, 1991). While
not all firms choose to grow (Ginn & Sexton, 1990;
Rosa, Carter, & Hamilton, 1996; Wiklund, Davidsson,
& Delmar, 2003), analysts suggest that some growth
over time is desirable for continued survival
(Delmar, Davidsson, & Gartner, 2003). Yet, it has
been long recognized that the decision to grow is
usually the choice of the entrepreneur, whose ex-
pectations for the size and scope of the business at
start-up ultimately affect the growth potential of
the business over time (Cassar, 2007; Stanworth &
Curran, 1976; Wiklund et al., 2003). A wealth of
literature describes the various approaches to
growth: expanding geographically, adding more
establishments, targeting new markets and custom-
ers, adding products/services, or mergers and ac-
quisitions. Accompanying these strategies are
prescriptions for enhancing the marketing mix of
growth firms: raising prices, increasing marketing,
improving distribution, or revamping the product.
Underpinning this literature is an assumption that
sales of entrepreneurial ventures will gradually in-
crease as the business expands, creating a rising
sales curve over time. In other words, growth is
assumed to be normal and follow a normal curve.
For more aggressive growth strategies, the curve
peaks quicker and creates a sharp angle (think
‘‘hockey stick’’); for slower growth strategies, it
peaks later. Although there is no consensus regard-
ing the number of stages involved, most assume that
there are contextual dimensions influencing the
process, especially age, size, and industry growth
rate (Hanks, Watson, Jansen, & Chandler, 1993).
However, most practitioners would probably agree
that there is nothing ‘‘normal’’ about growth pat-
terns, as each business takes its own pathway to
development; moreover, the academic literature
has not studied the various pathways in great detail.
As part of a cross-national research project spon-
sored by the UK Government’s Department for Busi-
ness Enterprise and Regulatory Reform (BERR) and
Her Majesty’s Treasury (HMT), we interviewed in
2008 19 U.S. entrepreneurs from the Boston area
and 21 entrepreneurs from the Southeast UK, all of
whom ran companies which grew 60% or more in
sales between 2003 and 2007. While this research
investigated a variety of factors influencing growth,
in this article we focus on decisions and activities
around management, markets, and money, and
confine our discussion to U.S. companies. The life
cycle literature suggests that the growth phase
typically involves major decisions around manage-
ment, money, and markets (Bates, Jackson, &
Johnson, 2007; Churchill & Lewis, 1983; Greiner,
1972; Miller & Friesen, 1984). For example, a domi-
nant management style, formalization of planning,
budgeting, and operating systems are frequently
referred to as key to achieving growth (Churchill &
Lewis, 1983; Flamholtz, 1986; Griener, 1972). Mar-
ket considerations such as geographic expansion,
market orientation, diversification, and product/
market scope comprise a second set of major
variables (Miller & Friesen, 1984; Scott & Bruce,
1987). Finally, there is the money. Growing ventures
need capital to grow; hence, considerations around
sources of finance, cash generation, budgeting, and
financial controls are central issues (Flamholtz,
1986; Scott & Bruce, 1987).
Our study found no single or common growth
pathway, and the vast majority of fast-growth com-
panies did not proceed according to a normal curve.
On the contrary, we found what can be depicted as
four typical growth patterns for fast-growth enter-
prises. The remainder of this article presents a brief
overview of the methodology for our study, and a
description of four predominant pathways we ob-
served for fast-growth firms highlighting manage-
ment, money, and marketing (Bates et al., 2007).
We close with some implications from this study.
2. Background of the study
Drawing from Dun & Bradstreet and Financial Anal-
ysis Made Easy (FAME) data bases, a list of more than
600 fast-growth firms within a 40 mile radius of
Boston was compiled. Businesses were selected
from information technology, financial services,
business and professional services, electronics, en-
gineering, and architecture sectors. This allowed
the exploration of a variety of experiences but
within a limited range of sectors, especially given
the influence of sector on growth (Van Stel & Carree,
2004). We identified those companies that had
482 C.G. Brush et al.

3. achieved real sales growth of 60% over the previous
3 years. In practice, businesses with nominal sales
growth of 75% over the previous 3 years were in-
cluded; this avoided asking respondents to make
real sales growth calculations, taking inflation into
account. It is acknowledged that a relative measure
of sales growth is easier for smaller, rather than
larger, firms to achieve given their lower starting
points (Delmar, 1997). Steps were therefore taken
to include small- and medium-sized enterprises
(SMEs), as well as micro firms, in order to develop
an understanding of growth issues faced by different
sized firms. Owner-only businesses were excluded.
The businesses studied employed 3-250 people,
were at least 3 years old, and were legally indepen-
dent rather than being subsidiaries or owned by
corporations. We arranged a 120 minute, face-to-
face interview with the CEO of each of the 19
companies and, when possible, audio-recorded
the discussion. Quotes utilized in this article were
culled from these interviews.
Despite restricting the sample to those report-
ing a 75% sales increase in the past 3 years, re-
spondents reported a variety of sales trends. As a
central component of the interview process, re-
spondents were asked to draw a line graph indi-
cating sales trends over time. Although the specific
focus was on the 3 year period immediately prior,
some participants were able to provide a longer
historical perspective. Focusing on the line graphs
enabled further questions about the drivers of
sales trends. What were the particular activities
undertaken by business owners, and other key
actors with whom they engage, that contributed
to the development paths plotted? Initiating and
managing business growth successfully is not sim-
ply about undertaking one particular activity well
while paying little attention to others. Creating
business ideas, accessing key resources, mobilizing
them effectively, and maintaining close customer
relations are all essential tasks that enterprises
must perform consistently if they are to achieve
sustained growth.
We made overhead transparencies of the hand-
drawn growth charts and, after several iterations of
overlaying the transparencies, four trends emerged
from the U.S. sample. We labeled these the rapid,
incremental, episodic, and plateau patterns (see
Figure 1). Some firms experienced gradual growth
over a 3 year period, while others experienced
explosive growth over the period following a phase
of low and/or stable sales. Others experienced high
growth followed by a degree of decline, yet still
achieved sales growth of 75% over the 3 year study
period.
As we examined these patterns further, it
became apparent that not only does growth follow
distinctively different trends, but also that growth
is primarily influenced by management, marketing,
and money.
Pathways to entrepreneurial growth: The influence of management, marketing, and money 483
Figure 1. Four growth pathways

4. 3. Factors affecting growth
3.1. The management
Business owners vary in their business objectives and,
specifically, in their growth aspirations. Generally,
the vast majority of business owners prefer to remain
small, and of those that seek growth, most seek
moderate rather than rapid growth (Acs, Parsons,
& Tracy, 2008; Ginn & Sexton, 1990). Growth aspira-
tions, like growth performance, are subject to
adaptation over time as owners’ experiences of own-
ership, the market, competition, and other business
life cycle considerations shape their business goals.
Indeed, some authors have suggested that growth
affects the motivations of owner-managers to seek
subsequent growth (Delmar & Wiklund, 2008). Be-
cause our sample was identified based on a history of
high sales growth, we asked respondents about their
intentions when they started/joined the business:
whether growth thus far was as planned at start-up,
ahead of plan, or behind plan. It is worth noting that
the degree to which business performance was in line
with owners’ expectations depended very much on
the nature and scale of those expectations. For
instance, highly ambitious owners might be more
likely to fall short of expectations precisely because
they aimed so high. This is in line with previous work
studying over-optimism of entrepreneurs (Mehta &
Cooper, 2000). Conversely, owners seeking modest
growth might be better able to achieve their goals.
In our study, four businesses achieved growth as
they planned, while seven achieved growth faster
than planned. Nearly all of the companies had a
plan; only one did not. Respondents’ reasons for
achieving growth as planned related to quality of
human resources, consciously managing the rate of
growth, and carefully managing customer relation-
ships. For those firms that grew slower than expec-
tations, customer cut-backs and the decline in the
U.S. economy were the major causative factors
cited. Those firms that reported managing or con-
trolling their rate of growth were driven by clear
rationale. These may not necessarily be regarded as
a lack of ambition, but the opposite: some owner-
managers wanted to grow their business at a rate
deemed appropriate, for example, on the grounds of
sustainability. Rather than risk aversion, this may be
interpreted in a positive way as managing risk with
the aim of securing long-term growth.
3.2. The market
3.2.1. Market development
All businesses face the challenges of finding custom-
ers, communicating product features, pricing
products and services attractively, establishing
effective distribution channels, implementing sales
and marketing efforts to win and retain clients, and
undertaking continued product development to sus-
tain sales (Hisrich & Peters, 1997). Business owners
pursuing high sales growth pay particular attention
to these issues because of their need to generate
increasing levels of demand from new and existing
clients.
The fast-growth enterprises we studied ap-
proached marketing and advertising in a slightly
different fashion. In the majority of cases, compa-
nies segmented and targeted their markets very
carefully, then employed direct selling combined
with a secondary web-based strategy as the means
to identify, sell, and maintain customers. One com-
pany identified customers from the Fortune 500
which had responsibility for hazardous waste sites;
another two financial services firms identified their
clients based on size of business and geographic
location, allowing targeted personal selling and
relationship building.
For many information technology (IT) companies,
there was no existing market for their proposed
products. Much of these firms’ early efforts there-
fore consisted of interaction with potential clients
and industry actors to discuss whether the proposed
product(s) would meet an unsatisfied, though
latent, market need. When there is no market
out there whose demands wait to be satisfied
(Sarasvathy & Dew, 2005), companies must convince
clients they have a requirement or need that the
proposed product or service can satisfy. While this is
the case–—to some extent–—with regard to all goods
and services, the challenge is particularly acute in
relation to novel, innovative products for which no
market yet exists. In these circumstances, firms are
market creators; this appeared to be a familiar
characteristic of fast-growth firms. Pioneers have
to incur the costs of constructing market demand
with no guarantee they will be successful; followers
can wait to discover whether such efforts are suc-
cessful and then attempt to exploit the market
opportunities created at lower cost. In addition, if
there is a regulatory aspect, there are additional
costs incurred in achieving governmental approvals
and in developing and implementing technology.
Similarly, another company providing Internet
content delivery services reported that having a
major media organization recognized as one of the
most innovative in the sector as a client was also
a means by which new business could be won.
A clinical testing company had invested in a new
software system but, despite interest in its product,
had yet to realize any specific benefit. Yet another
company noted, ‘‘our target audience is not as
484 C.G. Brush et al.

5. sophisticated as what we are capable of doing, so
there is some education that has to go on.’’ In short,
it appears that the challenges of fast-growth firms
transcend general contexts. The strategies of niche
market development and building customer rela-
tionships, rather than competing on price, appear
to go hand in hand with being a fast-growth firm.
This often involves the risk of upfront investment.
The relative maturity of these firms meant that they
had undergone renewed vintages of product devel-
opment and were much more likely to have a devel-
oped sales network.
3.2.2. Geographical diversification
Firms seeking expansion often aim to achieve this by
entering new geographical markets, particularly be-
yond the local area (Barringer & Greening, 1998;
Iacobucci & Rosa, 2005). In some sectors, expansion
might only be possible by securing export clients
because the national client base has been exhausted
or is too difficult to enter. Export activity was re-
ported in only five companies. This is consistent with
other data showing that the majority of U.S. small
firms tend to serve local or national markets, and that
small firms generally are not export-oriented, even in
more open economies such as the UK (Wheeler, Ibeh,
& Dimitratos, 2008). Of the sampled companies doing
business internationally, most of their customers
were in global industries (e.g., bio-pharma, engi-
neering design, software, advertising). In some
cases, international customers were served in the
U.S. On the challenge of entering new markets,
different perspectives were offered:
There are always brand names in our market,
but in addition to that, every market seems to
have three to four ‘‘Mom and Pops’’: locally
based organizations that never really expand
beyond that city, but which have been there for
decades and have a great reputation. That’s
generally what we are up against on a high
level.
–—Architectural firm
I say to my guys here all the time: Just remem-
ber–—every new person you meet, every new
company you meet–—as soon as you [leave
them], they’re going to go right to the Internet
and look us up. We always have to be thinking
about what’s the next thing we can do to our
website. How do we better provide information
and not let it get stale?
–—Financial services firm
It might be argued that expanded export activity
will increase as firms grow in size. But, it is not simply
a matter of firms diversifying sales geographically in
order to secure higher sales. First, the geographical
distribution of the research client base was often an
artifact of the date of interview: respondents
reported that in previous years, the distribution of
the client base was quite different. Taking on new
clients–—particularly those whereby the value of the
sale was high relative to total turnover–—could influ-
ence the geographical sales distribution markedly.
Sometimes, such changes were deliberately sought
by business owners as they consciously attempted to
enter new markets; however, on other occasions such
changes occurred as the consequence of clients seek-
ing out the business unsolicited, rather than because
the business had targeted clients in particular loca-
tions. This supports previous work from the export
marketing literature indicating that companies
often internationalize at customer request (Crick &
Spence, 2005).
Nearly all our study companies planned to grow in
the future, and at least five were planning to make
an acquisition of another company or were consid-
ering a merger. In two cases, the plan was to sell and
exit the business. Several planned to move into new
states geographically, while others planned to up-
date and create new generations of services and
products.
3.3. The money
All businesses require financial resources in order to
reach customers and fund growth. Lack of access to
capital or availability of financing can be a con-
straint on business growth (Brophy, 1997). Start-
ups can be financed from founders’ own wealth
and/or by accessing external sources of funding,
whether from informal sources such as family and
friends, or from formal, market-based sources such
as banks, venture capitalists, and private equity
firms. Once businesses have achieved sales, further
development can be financed using retained profits.
Some study companies sought external investors
while others did not; the latter indicated they did
not wish to cede any control over the business, and/
or that they were able to meet financial require-
ments from business revenues or informal sources.
Those companies that did not seek outside equity
were either self-financed, were financed from cash
flow, or relied on bank financing and short-term
credit. Several had lines of credit to manage
short-term cash flow variations. Three companies
indicated that lack of capital was a constraint on
growth, and in all cases, they were pursuing angel
financing. As these companies noted:
Our biggest challenge is raising money; raising
money with angel investors, in particular.
Pathways to entrepreneurial growth: The influence of management, marketing, and money 485

6. What I’m doing right now is a frustrating pro-
cess, like herding cats.
–—Educational services firm
We do everything with cash. We’ve built up
equity in the firm and have taken a more mea-
sured approach.
–—Architectural firm
We use debt pretty heavily, so our second mar-
ket was opened up with an SBA loan–—a very
small one–—and we established revolving lines
of credit that we used to cover both our sea-
sonality and to help finance some growth; to-
day, we are still using those. We have actually
pumped up our credit limits to almost a million
dollars at this point, and use that pretty fully.
Right now, we are in the middle of trying to
raise our first equity round; we haven’t, to
date, but are looking to do so moving forward.
–—Educational services firm
Overall, financing was found to be an important,
though not significant, constraint on business
growth. In some cases, securing bank or venture
capital funding was regarded as a challenge, even
though there is a developed venture capital com-
munity in the Boston/New England area and many
firms had a track record of successful prior fund-
ing. The next section provides an overview of the
four growth pathways revealed by our study, as
well as the influences of management, markets,
and money.
4. Pathways to growth
4.1. Rapid growth
Rapid-growth firms are characterized by fast, of-
ten extreme surges in sales and revenues; these
surges frequently far exceed the original expec-
tations of the business owner. Rapid-growth firms
are able to bring the right product or service to the
market, at the right time and the right price, in an
atmosphere where the overall macro and micro
market and industry forces have largely been fa-
vorable. Those businesses in our study which qual-
ified as rapid-growth firms faced competition, but
avoided it by utilizing geographic strategies
(i.e., choosing a specific locale in which to oper-
ate) or niche strategies (i.e., choosing a highly
specific product/service offering to a highly strat-
ified client base). Companies exceeding growth
expectations often did so because of customer
relationships. For example, a materials and sys-
tems engineering company noted:
Our first customer is–—and remains–—a large
customer, providing strong revenues and a solid
foundation of sales. Additionally, this customer
was our strategic partner, providing 27% of
initial funding. The partnership involved [our
company] acquiring a division of this partner
company, consisting of 28 employees plus the
existing customers and revenues, thus provid-
ing immediate expansion and a strong base
from which to grow. Sales went from $1 million
to $5 million immediately.
–—Design and architect firm
In another case, the CEO of an environmental
consulting firm explained:
We now have sales that are, maybe, five times
what I could have anticipated. Two things [ex-
plain this]: a lot of repeat and referral business.
–—Environmental consultancy firm
A financial planning company noted:
Client satisfaction for this service has been
tremendous, and referrals have spurred the
rapid growth of the company.
–—Financial planning firm
As stated from the field of IT:
The two things I would cite as the source of our
growth have been product quality–—I know ev-
erybody says that, but I have data to support it:
last year, nearly two-thirds of our revenue came
from either repeat clients or referrals–—and
being aggressive in pushing and opening up
new markets. We’re in ten cities today; 2 years
ago, we were in five. So, we have doubled our
unit count. We have plans to continue doing
that.
–—Software firm
Nonetheless, rapid growth is not without its pit-
falls. Fast-growing companies are cash hungry ma-
chines; the faster the growth, the greater the
appetite for cash. Many struggle to find the essential
cash to fuel this fortunate expansion, and the
amounts needed–—as well as the time-sensitive re-
quirements of the need–—often preclude organic
growth from internal cash flow alone. As Churchill
and Mullins (2001) have noted, there is a pace beyond
which companies cannot fuel growth organically
and must turn to external sources of cash flow: debt
(whether it be permanent or semi-permanent), eq-
uity financing, owner and family financing, and joint
venturing are some of the more common solutions.
But, cash is not the only potentially constraining
factor holding back the reins on rapid growth. Find-
ing qualified human resources, devoting the time
486 C.G. Brush et al.

7. and effort necessary to properly train and assimilate
new staff to the organizational structure and rou-
tines of the firm, and managing employment rela-
tions can often take up the time of top management
in growing firms (Gilman & Edwards, 2008). Partic-
ipants in our study cited the need to find properly
skilled employees as a critical factor to all stages of
their growth, and noted that retaining an effective-
ly trained workforce is one of the ‘‘stay-awake-at-
night’’ factors that senior executives ponder.
Growth-oriented entrepreneurs must also pre-
pare for the rigors of rapid growth. First, they need
to build a solid yet lean hierarchy of command that
fosters and enhances delegation whilst maintaining
clean reporting, management, and metric-based
evaluation. Second, it is critical that they develop
a future-forward eye and groom heirs/successors,
and develop senior second-in-commands and divi-
sional leaders. One of the most difficult personal
challenges entrepreneurs of all sizes of firms face is
preparing for and handling this ultimate transition
of power, which is essential for stable and sustain-
able growth.
4.2. Incremental growth
Firms which grow incrementally often do so for one
of two reasons: as a response to their assessment
and view of the business climate and the macro/
micro industry and market factors in their competi-
tive arena, or to suit purely personal goals for more
manageably-sized firms they can control. An ac-
counting firm included in our study noted it had
planned for a downturn and picked up other busi-
nesses in response, which allowed growth to contin-
ue at the rate anticipated. For its part, a medical
billing company decided to control growth in a way
that could be managed with qualified staff and
superior customer service, rather than opt for a
rapid growth rate.
Incremental growth is regarded at times as natu-
ral progression, a reflection of leadership transition
as the firm matures or reaches a new stage in its
evolution as a sustainable business. Such firms will
carefully construct plans to hand over the reins in a
controlled manner, facilitating the mentoring of the
newer business owners while maintaining consisten-
cy of culture, operations, and all-important client
relationships:
I think transitioning a firm from first generation
to second generation is a fascinating thing. I’m
actually going to be sitting on a panel that talks
about ownership transition. It’s not ownership
transition; it’s actually leadership transition.
–—Advertising design firm
I believe there is a real difference between a
second-generation-owned president and a first-
generation-owned president. Some of it is psy-
chological, some of it is what’s in your gut.
Every one of us probably has the ability to leave
here and start our own firm, but there’s some-
thing we helped create with the first-genera-
tion leader that we’re comfortable with. The
first-generation leader took the risk. I joined
[the firm] in 1981; we were 15 people. We grew
and we shrank, and we grew and we shrank, and
we sort of got used to spending time together.
The job of the second-generation leader, I’ve
always said, is to leverage and expand based on
the opportunities created by the first-genera-
tion leader.
–—B2B services firm
Other firms choose incremental growth as a nat-
ural response to the competitive environment as it
evolves over time. These firms may find themselves
so devoted to serving a current and essential client
base that they can only afford to ‘‘add around the
edges,’’ or bring on only one or two new clients at a
time. While mostly profitable, growth in sales, rev-
enues, and bottom line returns more resembles that
of slow and steady dividend paying public companies
than that of advanced trajectory high-growth, high
capital return firms:
In this profession, you really need to continue to
seek new business just at the very least to stay
even, and hopefully grow by adding incremen-
tal business while maintaining existing busi-
ness. Over the last 9 months we’ve probably
picked up more than a half a dozen really
substantial pieces of business, which has been
great. I think this is a result of the continuing
effort [we expend].
–—Financial services and accountancy firm
Employees and their orientation is another factor
involved with creating incremental patterns of
growth. When companies cannot find the right
employees, or best-and-brightest new hires simply
do not mix with the vision and direction of the
company, growth slows and sometimes stalls as the
company engine is re-tuned. The owner of a high-
tech firm included in our study mentioned that he
had to replace a 15-person development team
three times over within 36 months, as the
technology it was developing outpaced the skills
sets of then-current technical staff members. Al-
though the teammates worked diligently on the
project, their ‘‘heads-down’’ dedication prevented
them from learning newly-needed, mission-critical
skills in a timely manner.
Pathways to entrepreneurial growth: The influence of management, marketing, and money 487

8. 4.3. Episodic growth
Growing businesses need to manage resources ef-
fectively if they are to achieve sustainable growth
without periods of retrenchment or inactivity
(Macpherson & Holt, 2007). We sought to investigate
the relationship, if any, of managerial action as a
causal factor for these episodic growth patterns.
Analysts find episodic growth patterns–—whereby
companies burst into a high-growth mode, only to
then suffer a period of stagnation or deflation in
sales, revenues, and profits–—challenging to tackle.
Internal causes include the managerial capabilities
and capacities to cope with growth, whilst external
causes include the cyclical nature of the economy or
market segments. Episodic growth and its causes are
exemplified in the study by a lack of advanced
management skills in finance, marketing, or oper-
ations; difficulties within management teams having
multiple objectives, conflicting visions, or outright
discord; and an unfavorable business climate or
economy. In the United States, in particular, the
late 1990s through the early 2000s were character-
ized by relatively strong and sustained growth across
almost all sectors of the economy; thus, a rising
economy lifted the growth opportunities for all
firms. As the boom began to wane, certain industries
fell sooner, and while most all were forced to lower
levels of sales in the period beginning January 2008,
some fell faster and deeper than others.
In light of the aforementioned finding by
Macpherson and Holt (2007), respondents were
asked two related questions concerning managerial
constraints: First, what were the major managerial
challenges of planning to grow a business, and
actually growing? Second, did the managerial skills
available to the business constrain business growth?
The results found that existing management capac-
ity and capabilities were sometimes impediments to
achieving steady growth, as the management team
sought to catch-up with the demands commensurate
with a growing business.
Respondents openly reported a lack of manage-
rial skills and experience to deal with growth, at
least during the early stages of business develop-
ment. This was not merely a result of the scale of
demands on the existing management’s skill and
knowledge base. The very nature of the demands
on management teams changes as businesses grow.
Growth inevitably requires the expansion of the
labor force, or certainly labor input; this meant
that somebody within our study firms had to orga-
nize and manage new staff or the new labor input.
Hence, owner-managers reported that expansion
triggered the need for an enhanced managerial
capacity, as well as a change in their own role within
the enterprise: to behave more strategically and
work ‘‘on’’ the business rather than ‘‘in’’ the busi-
ness. As these companies noted:
My problem with the new principals is [this]: we
all learn how to run and manage projects, and
then we keep going back to that because that’s
what I guess we like to do, but it’s also what we
know how to do. You put them in a principal
managerial role, [and] they keep slinking back
to getting over-involved in projects and not
getting involved with management.
–—Internet media firm
I would say that we have gotten very good at
managing our cash flows and projecting, and
forecasting those on a month-by-month basis.
But I would say that my personal inexperience
at equity fund raising is holding the company
back right now. I have been working at this for a
good 3-4 months now, and were I either more
experienced or someone with a stronger net-
work in that, I think we would be further along
than we are.
–—Educational services firm
Such examples are not rare; indeed, included in
our study was a hazardous waste clean-up company
which suffered slower than planned growth due to
its lack of capacity to serve customer needs. These
cases illustrate that some businesses grow in bursts,
rather than incrementally, because of bottlenecks in
managerial capabilities. Having to switch roles,
assimilate new information and knowledge, appoint
new managerial staff, and so on contribute to a
growth pattern that is episodic rather than steady.
As indicated, many respondent firms were using
cutting-edge technology. For some, this caused
problems because the technological base itself
was unstable and not yet proven:
We had exceptionally aggressive expectations.
We thought it would take off from the get-go
after a year or so of sort of a start-up phase.
But, it turned out that it took much more time
to work the kinks out of the technology from the
standpoint of what we inherited. It was not
really market ready.
–—Environmental services firm
Other firms displayed staccato growth because of
vacillations in customer demand. In several cases,
unmet business goals were due to customer cut-
backs. The causes of episodic growth were therefore
multifaceted, but were not merely a result of vac-
illations in market demand. Internal capabilities and
need for structural adjustments, especially in the
management function, contributed to a sporadic
488 C.G. Brush et al.

9. rather than smooth growth pattern. This sometimes
resulted in sales blips instead of consistent upward
trajectory. These findings underscore the literature
that emphasizes the absorptive capacity of a firm as
key to its development and competitiveness (Zahra
& George, 2002).
4.4. Plateau patterned growth
Often seen as the ‘‘end-game’’ in business growth
cycles, plateau patterned growth is reflective of
slowed growth to the point of replacement sales
versus new sales, stabilized revenues, and ultimate-
ly declining profitability; the latter is due to com-
merce standing still whilst inflation continues to
erode existing assets over time. Much research
has been focused on how large companies reach
this plateau point and the perils to their future if
they remain in non-growth, non-innovative cycles
(Bower & Christiansen, 1995). The literature focuses
less on ways that smaller firms grow, in part because
fast-growth firms tend to create more innovations,
jobs, and returns to investors (Acs et al., 2008).
While most entrepreneurs would say that faster
growth is more desirable, the reality is that most
firms do hit plateaus, often due to ineffective mar-
keting, static or incorrect strategy, or uncontrolla-
ble economic factors. As one firm stated so clearly:
I would say that every marketing effort we’ve
ever made has yielded nearly no results. And
it’s not that we’ve [conducted] poor marketing
efforts; it’s that it’s really an introduction from
one person to the next, one client to the po-
tential future client, that will almost certainly
yield work. Trying to, through some marketing
effort, force our way into one firm or the
other. . .I don’t want to give the impression
that it’s without merit. But, it has a very low
impact on sales.
–—Environmental services firm
It is important to note that our study firms gen-
erally do not fit this pattern of stagnating growth,
save for periods of time. Our study firms did indeed
often reach plateau patterns of growth, but this was
temporary as they then re-invigorated themselves
either through changed strategy, market tactics,
orientation, or resolving roadblocks in technology,
staffing, or deployment.
Plateau growth is thus not an irreversible death
knell for firms. It can be an opportunity for active
reflection, coupled with revised and revitalized
strategy for those firms willing and able to re-invent
themselves and propel themselves through innova-
tion into a new and more profitable future. Such
firms take their direction from both leadership vision
and market cues. The challenge is to make this
transition before the levelling trend in this growth
curve becomes a downward and final decline.
5. Implications
Our study of 19 U.S. firms finds that fast-growing
companies exhibit different rates, patterns, and tra-
jectories of growth. We stated in our introduction
that the scholarly literature abounds with notions
which support a single, steady pathway to growth.
Yet, it also includes references to firms that choose
not to grow, or to grow slowly, which remain no less
successful than their faster-trajectory counterparts.
What distinguishes these firms from one another are
the choices they make based on management ability,
capability, and accessibility. In the ability arena, we
note from our study that business owner vision,
strategy, and direction are the essential first refer-
ence point to chart a course for successful growth
at any pace. The ability of the business owner to
implement, and then manage to, these goals often
determines whether the next waypoints will be close
to–—or further from–—growth goals. Similarly, capa-
bility–—in terms of execution, but also as measured by
an adequate, functional, and complimentary work
force–—is needed to implement tactical initiatives
and achieve business milestones. Some companies
findthemselves saddledwith a work forcethat failsto
deliver, or is in disharmony with the company culture
or business owner’s vision. Other firms suffer with
under-qualified talent or unproven technologies that
limit their ability to act.
As we look to factors outside the company itself,
we find that the time-proven micro and macro
industry, market, and economic forces act like
waves, weather, and wind in either propelling firms
forward or preventing them from sailing smoothly
along their charted course. An inability to access
necessary talent can slow growth, despite market
demand for the firm’s products and services. Simi-
larly, an abundance of talent, resources, or perfect
product cannot overcome the doldrums of a reces-
sionary economy when cash is tight and customer or
client spending is sparse. Mounting a massive mar-
keting campaign has often been hailed as a grand
offense by many large companies in order to achieve
success. However, our study has shown that for
smaller firms, close personal relationships, word-
of-mouth referrals, repeat business, and niche mar-
keting efforts prove more expedient, cost effective,
and successful.
Much has been made of large corporate coffers, or
‘‘war chests,’’ that give industrial giants the ability to
outlast, out-siege, and overcome their adversaries.
Pathways to entrepreneurial growth: The influence of management, marketing, and money 489

10. Most firms, however, achieve growth with far fewer
resources. Reluctant to share control, equity is
rarely used outside of owners/partners/small em-
ployee ownership pools, and friends and family.
Access to debt financing is more difficult the smaller
the firm, and often takes the form of personal
rather than business loans–—a path many choose
to avoid. Thus, our study shows limited access to,
or use of, external funding, with the more common
instrument a revolving line of bank credit used
for periodic access. Hence, firms in our study grew
mainly through organic pathways, funded through
small and strategic acquisitions, or conversion of
new prospects to new sales, rather than through a
large injection of venture capital funding or external
finance.
Our study has shown that, of the firms which do
seek to grow, there appears to be a difference
between intentions and outcomes: some display
rapid growth trajectories (Rapid Growth Pattern);
some, slower, more measured rates (Incremental
Growth Pattern); others, episodic periods of quick
growth followed by sharp retrenchment (Episodic
Growth Pattern); and, while no owner-managers of
firms in our study actively chose to stop growing,
some did reach points of stagnation, either in their
past or at that current time (Plateau Growth Pat-
tern). We found that three factors–—management,
marketing, and money–—have emerged as core com-
ponents, or concepts, affecting company growth
across these growth patterns. While not every factor
was critical at each moment of growth for each firm,
every entrepreneur interviewed cited the relative
importance of each factor at some time during
the growth of their firm. Thus, firms experiencing
growth do not do so in the same manner, at the same
rate, or with the same outcomes.
Acknowledgments
The authors would like to acknowledge the support
of the Department for Business and Regulatory
Reform and Her Majesty’s Treasury for funding the
research on which this article is based. We are also
grateful to the business owners who gave their
valuable time to be interviewed.
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