Growing a business quickly seems like a good problem to have. But there are some real pitfalls leaders may experience if rapid growth is happening with your company, some of which could threaten to derail your progress if left unchecked.
Mismanagement of funds, poor work culture, and a failure to focus on your core services and products are just some examples that could turn rapid growth into a plateau or decline.
Here are 5 things you should be aware of when your business grows quickly.
Mismanagement of finances is the number one thing businesses that grow quickly fall victim to.
In a startup setting, this could mean mismanaging venture capital funds. But it could also be simpler, such as when a small business fails to allocate income to the right areas.
One mistake business owners make when experiencing high volumes of growth is thinking more sales automatically lead to more profit. This could be true temporarily, but if business processes (which typically increase expenses) don’t catch up, profit margins could dry up quickly.
Consistent cash flow errors could also lead to lengthy cash gaps, creating a lag time between creating your business’s action plan for further growth and actually being able to execute on those ideas.
Avoid this by: Relying on your financial data to make key decisions about your business. (Using a secure merchant processing service to track sales and generate reports can make this process much easier.)
Outdated technologies could be costing your business serious amounts of money, especially if you’re in the middle of a growth spurt. Consider the actual numbers: a 2016 survey found that U.S. businesses lose $1.8 billion annually as a result of outdated technology.
In-house computer infrastructures and outdated legacy softwares are two of the biggest culprits, as these services can be costly to maintain. Investing in new tech can be expensive, and it will take time to train your staff. But long term, it’s likely worth it.
Avoid this by: Switching to cloud-based platforms or using a hybrid model for your business.
A business that grows fast tends to hire fast, which can lead to poor fits and low-quality management that affects workplace culture.
Hiring the wrong people also tends to:
The foundation of any business is its people. Growing too quickly shouldn’t sacrifice this foundation—it should enhance it.
Avoid this by: Training employees and carefully vetting new hires, or slowly hiring by department instead of bringing on dozens of new people at once.
Losing touch with the customer is an unfortunate side effect of rapid growth some businesses experience. Sometimes, the emphasis on acquiring new customers leads to old customers being left out in the cold. But even your most loyal customers could be quick to criticize if they feel like they aren’t being treated well. (This is another nod to why hiring the right people is key.)
Customer service, whether you’re in retail or running an eCommerce business, is key. In fact, it’s probably the determining factor for whether your business’s growth is sustainable. Businesses suffer when they lose their focus on the customers.
Avoid this by: Making adjustments based on customer retention metrics and giving customers a direct pipeline to leadership to voice concerns.
Getting eyes on your business and converting sales is great. But if you fail to innovate and meet market demands as you grow, you’re likely to hit a plateau or even lose business.
This is especially true for businesses that use a membership subscription model for their products. Perceived value can drop off in just a matter of months if you aren’t constantly refining and upgrading the services you provide. In crowded marketplaces, this is a prime opportunity for your competition to creep in.
Avoid this by: Putting leaders in place who know what the core product is and believe in adding value whenever possible.