Growth is a common indication of a successful business venture. It can be exhilarating to see all of your hard work starting to pay off in only a matter of months, if not years. Your company is flourishing. Sales have never been higher. And after long nights of brainstorming and pitching proposals after proposals, your company is finally making a name for itself! Isn’t that the best part of running a business?
At first glance, business growth is absolutely a good thing. However, growing your business way too fast can be problematic. In fact, it can be just as risky as not growing at all. Things can get out of control if you don’t know how to keep up with such a high-speed chase.
It’s easy to get blindsided when things are smooth, but just because you made it through that early stage doesn’t mean the challenge is over. Fast-growing companies may face another set of challenges down the pike. Sometimes, it can even put your business at much greater perils compared to those that kept you up all night during its rocky startup years. But, don’t fret. Knowing the risks of rapid business growth is a strategic move to help prepare your business for the most significant changes.
Here are a few common issues to watch out for during the growth process, along with a few essential tips to help you set the right pace for your business.
Cash Flow Crisis
Keeping track of your finances gets more complicated as you grow. Chances are you’ll constantly be needing to borrow more money to push for higher sales and revenues. However, relying too much on credit to suffice your monthly expenses can lead to even larger problems in paying your bills, inventories and even employees if you’re not careful.
Once outgoing expenses exceed your operating budget and monthly revenues, you may outpace your cash flow. Suddenly, an unforeseen expense or a bad sales month could leave your business in dire straits.
You need a realistic backup plan to keep cash flowing during emergencies. Diversify your business funding sources by putting your personal assets to use or expanding your client base. It’s also worth consulting an accountant, as they are experts in handling tons of financial data. They’ll be able to review your numbers and point out specific issues to keep your finances in line.
An Outgrown Workspace
A fast-growing venture could be a problem for home-based business owners. They’ll need more space for new employees, equipment and tools, inventories, and corporate meetings if necessary. Before you move to a larger space, be sure to examine your options to make sure this won’t affect your cash flow.
You may extend your current workspace by opening an additional room at home if the budget seems a bit tight. Otherwise, you may consider buying or leasing a low-cost commercial real estate that is large enough to accommodate current and future growth. Perhaps the biggest pro of having a commercialised workspace is that it adds significant value to your business, which may attract more clients and investors.
When it comes to business growth, it’s not just the company that’s growing but also your responsibilities as an owner. You’re mainly accountable for all aspects of your business, from sales and staffing to marketing, crowdfunding and more. One mistake might take a toll on the entire company. Here are some common signs of mismanagement to avoid:
- Poor organisational skills;
- Micromanaging employees;
- Ignoring marketing opportunities;
- Lack of transparency;
- Credit stealing;
- Making decisions without asking for feedback.
Hiring the Wrong People
Once your company is booming, the quality of the people you hire becomes a big deal. No matter how satisfying your product or service is, your business will barely survive the growth phase without the right team. Poorly prepared employees can have a massive impact on your business.
You need to choose your team wisely. However, it’s more difficult to determine a good or bad hire in larger companies with multiple managers valuing different qualities in applicants. That’s why business owners must be hands-on when it comes to choosing the right employees.
The problem with some business owners is that they don’t hire people smarter than themselves. As long as they share common goals and visions for a company like you, those key players could be your biggest assets. They bring a lot to the table, from outstanding outputs to innovative ideas, which you can use to keep growth moving smoothly.
Providing exceptional products or services has probably led your business to rapid growth in the first place. However, an understaffed growing company can be a double-edged sword. On one side, high demand creates a buzz to attract more leads. On the flip side, meeting that demand can be challenging, especially if you’re a one-man-band.
You need to keep a solid and long-lasting relationship with your customers to keep your business afloat and gain more recommendations. Since you don’t have time and effort to juggle everything, you must create a team of excellent customer service representatives to accommodate customers’ inquiries and understand their concerns. In addition, sending thank you notes on emails and social media, recognising their birthdays, or offering great deals and discounts can win your customers’ hearts.
Company growth is an exciting time for small business owners, but it’s essential to manage it correctly. It’s normal to encounter certain issues down the line as part of the growing process. So long as you’re flexible enough to handle each of them, then you’re moving in a positive direction. Most importantly, your business must be adequately prepared and financed when it’s time to meet those biggest changes.
Disclaimer: This content does not necessarily represent the views of IWB.