Rules of growth

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Growth is the No. 1 reason why businesses fail.

Producers must learn to be patient and understand that they can’t always expand in one step, says David Kohl, professor of applied and agricultural economics at Virginia Tech University.

Rapid-fire expansion — where you never have time to catch your breath and you operate on a shoestring budget — can and often does lead to business failure. In a highly leveraged business, sometimes all it takes is one thing to go wrong to start the downhill slide.

The better method, says Kohl, is to build up some working capital before you expand in order to be able to weather the bad times.

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