Growth is perceived as a good thing. Companies and businesses want to grow so that they can increase their revenue but unbridled growth is just as dangerous as decay. When looking for ways to grow your business, be mindful of the different risks illustrated by these two companies.
1. Zynga
Zynga is a gaming company that launched in 2007 and is best known for its extremely popular Facebook game, Farmville. The company became Facebook’s most successful app developer but in 2013 they had to shut down some of their games and lay off over 500 employees and then one year later, they laid off another 314 employees.
What went wrong?
Zynga’s filings describe a substantial dependence on Facebook for players and revenue. A company relying heavily on another platform cannot control all changes to distribution or visibility. That dependence is a risk to examine, but it does not establish a single cause for every restructuring decision. Zynga did not simply go out of business: Take-Two completed its acquisition in May 2022. The example concerns a difficult adjustment, not a company that ceased to exist.
2. Wise Acre Frozen Treats
Wise Acre Frozen Treats began making organic frozen popsicles in 2006. They had a popular and unique product and so they quickly grew. By 2008, the company had 15 employees and a 3,000 square foot facility. They had secured contracts to increase their distribution but before this could happen, they went bankrupt.
What went wrong?
Wise Acre Frozen Treats were making and selling physical products so their operating costs expanded at the same rate as their customers. The issue is that they had to pay to produce more popsicles before they had the extra revenue from their new customers. This case illustrates the difference between winning orders and having the cash and capacity to fulfil them. Treat the account as an individual business history, not proof that a particular growth rate inevitably causes failure.
Warning signs to check before the next expansion
Look at delivery performance alongside sales. Are waiting times rising? Is the same person repeatedly rescuing orders? Are refunds, rework or complaints increasing? More sales can hide those problems for a while. Review them by product or customer group so a healthy part of the business does not conceal a loss-making one.
Check dependence separately: one sales platform, distributor, large customer or supplier can create a point of failure. Ask what you could still deliver if that relationship changed next month. The answer may be a smaller product range or a slower rollout, rather than immediately building an expensive replacement channel.
A practical expansion checkpoint
Before accepting a larger commitment, put expected payment dates and outgoing costs in a cash forecast. British Business Bank guidance distinguishes available working capital from sales expectations. Have the forecast reviewed by the person responsible for finance and include a delayed-payment scenario. Funding under discussion should not be treated as cash already available.
For illustration, a manufacturer could trial a limited regional order before promising national distribution. Agree who checks production quality, delivery capacity and customer response, and set a review date before the next increase. This is a planning example, not a reconstruction of either company’s decisions.
Define the pause conditions in advance: for example, missed delivery targets or an unresolved funding gap. A pause can protect existing customers while the team fixes the bottleneck. Growth is easier to assess when each new commitment has an owner, a capacity check and a clear point for reconsideration.
