From momentum to sustainable growth: strategies for SMEs in 2026

In the dynamic world of small and medium enterprises (SMEs), the moment a business finds itself in a robust financial position is often met with an instinctive urge to maintain momentum.

Sales figures surge, demand spikes, and overall confidence rises.

Yet, strong performance alone does not equate to guaranteed growth. The time for action is now, as many SMEs face an insidious risk: failing to leverage favourable market conditions for deliberate expansion.

“Momentum is one of the most important phases in a business cycle,” asserts Garth Rossiter, Chief Risk Officer at Lula.

Yet, it remains significantly misunderstood. The real opportunity lies not in merely recognising performance, but in understanding how to translate that performance into sustainable growth.

Commonly, businesses mistake high activity levels for readiness to scale. An uptick in demand does not automatically provide the capability for expansion.

Growth imposes strain on cash flow, operational capacity, and delivery schedules long before additional revenue is recognised. It is crucial to ask: can this revenue increase be sustained without compromising stability?

Successful expansion is predicated on the presence of consistent trading patterns, predictable inflows, and a solid understanding of cost structures.

As Rossiter notes, “When growth is underpinned by repeatable performance rather than one-off gains, it becomes something that can be planned for.” This precision in planning allows businesses to approach expansion as a calculated decision, not a gamble.

Moreover, momentum often highlights operational constraints such as stock shortages or stretched teams.

While these issues may appear to be mere challenges, they frequently signify untapped demand—an opportunity waiting to be unlocked.

“These bottlenecks are not necessarily warning signs,” Rossiter explains. “In many cases, they indicate that the business has outgrown its capacity and must invest to facilitate further growth.”

The peril lies in postponing critical decisions.

Delaying action until operational pressure mounts diminishes flexibility and results in hasty, suboptimal outcomes.

Successful expansion hinges less on rapid growth and more on the accurate timing of investments made while momentum is still tangible.

By doing so, SMEs can absorb costs, negotiate with vendors from a solid position, and maintain control over their growth trajectory.

From a risk viewpoint, proactive expansion is inherently more sustainable than reactive scaling. Those who wait until performance declines often grapple with shrinking margins, reduced options, and increased financial strain.

“The safest time to invest is often when performance is strong,” remarks Rossiter, emphasising that this is when businesses can most effectively manage downside risks.

One of the primary barriers to SME growth is the misalignment between potential opportunity and available cash flow.

Expansion necessitates upfront investment, while returns materialise over time. Without access to capital congruent to actual trading activity, businesses face a stark choice between caution and lost opportunities.

“Growth rarely fails because opportunity is absent,” Rossiter asserts. “It fails when businesses cannot access capital at the moment it is needed.”

By aligning funding with performance, SMEs can invest confidently, sidestepping the pitfall of postponing decisions until market conditions become less favourable. Momentum, by its very nature, is fleeting.

The cornerstone of long-term success hinges on quickly recognising and appropriately acting on this momentum.

Sustainable growth arises not solely from optimism, but from astute timing, data analysis, and the availability of financial resources.

“In the context of SMEs enjoying strong performance, the challenge is not merely whether to pursue growth,” concludes Rossiter. “The real question is how to ensure that today's momentum evolves into a durable foundation for the year ahead.”

BUSINESS REPORT