Is it possible for your business to grow too fast? You may not think so, but rapid growth poses its own set of obstacles, and growing too quickly has been the downfall of many a small business. Here are some of the most common challenges posed by rapid growth, and how you can meet them.
One of the most common problems new business owners run into is cash flow. Rapid growth of your business means a corresponding growth in expenses, and many businesses soon find themselves with more outflow of cash than they expected. This can be particularly troublesome for companies who are operating on startup capital or loans. Unless the owner is prepared, a single month’s dip in sales can mean financial disaster.
This becomes a particularly thorny problem when income has been earned, but hasn’t yet been collected — many a new business owner has been faced with the stressful situation of leaving employees unpaid while they wait for receivables to arrive.
As a business grows, infrastructure and complexity grows with it. This means more time and resources are required to keep things running. Payroll is simple enough when it’s one person signing checks for a staff of ten — when that staff has grown to a hundred, the same approach won’t work. A business owner must have systems in place to account for growth in personnel and human resources, or risk taking a huge hit in morale and staff motivation.
Another common problem that owners run into when starting their businesses is fulfilling orders. An overnight success can leave a business swamped with orders they can’t fulfill in a timely fashion, leaving them with unhappy customers, damage to their reputation, and possibly a flurry of negative reviews on the heels of fleeting success. Many business owners address this by expanding their infrastructure (although this can contribute to cash flow problems), while others turn to external solutions to manage fulfillment needs.
Keeping up with demand isn’t the only facet of customer service that business owners must attend to. Some businesses make the mistake of changing up their strategy or product too soon after an initial success, alienating the customers who contributed to that success in the first place. Business owners must also be diligent in nurturing their existing customers — whether it’s customer support, feedback, reviews, or just saying thanks.
While it’s important to stay true to your vision as a business owner, it’s also vital to change with the times. Technology and business strategy is a constantly-shifting field. A savvy business owner must be ready to update their approach and stay current with developing trends. When combined with rapid business growth, however, the reach of a new business can easily exceed its grasp. Following every trend and adopting every new strategy not only adds massive complexity to a business strategy, it also tends to be incredibly expensive — which brings us back to those cash flow problems again.
So what do successful business owners advise when faced with the challenges of rapid growth? Most of them recommend the following:
- Take baby steps and avoid sweeping changes.
- Don’t become complacent.
- Be diligent about collections and receivables to keep that cash flow coming.
- Focus on customer service first and foremost.
With these strategies in mind, you can help mitigate the risks of rapid growth and keep your business thriving well into the future.