Why Some Small Business Owners Struggle with a Growth Mindset

And How to Shift from Defensive Thinking to Strategic Expansion

Report by Sean Dunne, Owner | Founder, Dominium Capital

📌 Executive Summary

Many small business entrepreneurs say they want to grow - but their behaviour often reflects a defensive mindset: obsessing over costs, avoiding risk, and citing external conditions like “a tough economy” or “staff shortages.” While caution is sometimes warranted, chronic defensive thinking can choke opportunity and lead to stagnation.

This report explores the root causes of defensive thinking in small business ownership, the traits and behaviours that define a growth mindset, and practical strategies to help business owners shift their perspective - so they can scale with confidence, not fear.

🔍 Part 1: Understanding the Defensive Mindset

1.1 What Is Defensive Thinking?

Defensive thinking refers to a protective mental stance focused on preserving resources and minimising downside rather than pursuing upside or expansion. It often manifests as:

• Reluctance to invest or spend
• Excessive focus on cost-cutting
• Fear of external risk (e.g., economic volatility, competition)
• Overreliance on anecdotal evidence or recent setbacks

1.2 Psychological Drivers

Defensive thinking is often rooted in lived experience - particularly for small business owners who:

• Started with limited capital or had to “bootstrap” their growth
• Have lived through economic downturns (e.g., GFC, COVID-19 lockdowns)
• Are risk-averse by nature or have experienced a business failure
• Work in industries with high overheads or low margins
• Feel personally entangled with their business identity (e.g., they are the brand)

Research from Stanford University (Dweck, 2006) highlights how fixed mindset traits-such as avoiding challenges and perceiving effort as fruitless-can lead to stagnation in business performance. Conversely, a growth mindset embraces experimentation, learning, and resilience.

📉 Part 2: How Defensive Thinking Shows Up in Business

Below are common real-world behaviours associated with defensive thinking:

🚀 Part 3: What Is a Growth Mindset in Business?

A growth mindset in business ownership means seeing challenges as opportunities, believing that skills can be developed, and understanding that intelligent risk-taking is essential for scale. This mindset includes:

• Strategic investment (spending with a clear ROI lens)
• Openness to coaching, systems, and data
• Delegation as leverage (not loss of control)
• A focus on long-term value, not just short-term savings
• Curiosity about what works in the market - including what competitors are doing well

The Data on Growth-Oriented SMEs

According to a 2023 report from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO):

• High-growth SMEs allocate a higher percentage of revenue to technology, people, and marketing.
• They are twice as likely to use advisers or mentors than stagnant peers.
• Businesses that actively review pricing, marketing and strategic hiring grow at 3–5x the rate of cost-fixated businesses.

🛠 Part 4: Strategies to Shift Mindsets - Without Confrontation

Here are practical methods to shift mindset constructively:

4.1 Use Case Studies or Peer Examples

“One of my other clients increased net profit by $75,000 not by cutting costs, but by investing $20,000 in smarter digital lead generation. Want to see what that looked like?”

Why it works: Most people need to see what's possible in a context they relate to.

4.2 Ask Strategic Questions

These gently challenge fixed beliefs:

• “What would growth buy you - time, exit options, freedom?”
• “If your competitor’s doing well, what are they doing that we haven’t tried?”
• “What does success look like 12 months from now?”
• “Could we run the numbers on an investment scenario, just to explore the upside?”

4.3 Reframe Spending as Investment

Instead of: “It’s too expensive to hire a digital marketing expert.”

Try: “If that hire brought in an extra $200,000 of sales in 12 months, would it still feel expensive?”

4.4 Make the Future Tangible

Visualise what not growing looks like:

• “What if you stay at this revenue level for the next 3 years - what’s the impact on your retirement, your time, your health?”
• “What happens if you get sick or can’t work for a month - can this business still function without you?”

🔄 Part 5: Defensive vs Growth Thinking – Summary Table

🧭 Conclusion: Shifting Mindsets = Unlocking Value

Small business owners who remain stuck in defensive thinking often find themselves overworked, underpaid, and under-rewarded - despite strong work ethic and years of commitment.

My role as an adviser who specialises in working with Small Business Entrepreneurs is not just to offer financial plans - it's to challenge thinking patterns and illuminate paths to value, scale, and freedom.

With the right data, empathy, and frameworks, most owners can shift from fear to strategy - and in doing so, create a business that supports their life goals, not just consumes them.

If you are a Small Business Entrepreneur and would like to have an obligation free initial discovery call with Sean, please book your call using this link.