Growth is good, when it comes to your business. After all, growth means increased market share and bigger profits. Right?
Not so fast. The reality is, the downfall of many a small, vibrant business is a fundamental failure fuelled by too-rapid growth. The risks of rapid growth can outweigh the advantages and, if you’re not careful, cost you the success of your business. However, with proper planning and strategic forbearance, your business can enjoy healthy, stable growth now and in the future.
The Risks of Rapid Growth
If your business is growing at a rapid pace, congratulations! Be sure, however, to avoid falling into the following common pitfalls of rapid growth.
When demand outstrips capacity: When demand for your product or service becomes greater than your ability to fulfill, you wind up with backlogged orders, frustrated customers, and lost sales.
When product quality is compromised: Too often, rapid-growth companies will cut corners on production of their product or delivery of their service to keep up with demand. Don’t forget that your reputation is at stake, and that your most valuable customer is a repeat customer.
When cash is crunched: Growth might mean bigger profits, but it can also be expensive. Often, growth of your business will require bigger facilities, more (and more senior – and thus higher salaried) staff, additional equipment, and so on.
When employees become disgruntled: The perfect management team for your 25-person company may not be so perfect for your 200-person company. Scalability requires appropriate leadership and experienced staff who can handle the more sophisticated operating needs of a larger company.
Depending on the nature of your business, there will be other traps you can easily fall into during a time of rapid growth. Let’s have a look at the best ways to handle growth successfully.
How to Ensure Growth Is Good
How can you grow your business in a manageable, scalable, profitable manner? Start by employing the following key tips.
Start with a strategic plan: The best growth is growth that is planned. If success catches you buy surprise, then sit down and make a plan as to how you are going to deal with this happy turn of events. The worst thing you can do is “wing it.”
Get your financing in order: Before you get ahead of yourself, be sure you have the funding to facilitate growth, and understand just how much growth you can accommodate. Remember that bigger doesn’t always mean more profitable; your job is to find the right balance.
People power is paramount: Successful growth is typically a team effort. If there are too few people at the helm, or your management team is inexperienced, now is the time to ensure you have the right crew in place to sail into success.
Tighten up your processes: As your company grows, it becomes increasingly important to have air-tight systems and processes in place. Identify the weak spots in your technology, your sales process, your support infrastructure, reporting systems and financial controls. You may need to invest in new technologies to support growth.
Ramp up piece by piece: Rather than invest now in a growth model you hope to achieve in the future, handle your growth in stages. If you don’t need middle management just yet, don’t hire yet. If you can put off buying an expensive new piece of machinery until you really need it, then do.
Remain flexible: The best laid plans can go awry, and we can’t always foresee the future.
While solid planning is key, agility is also an important component of successful growth.
Managed properly, the growth of your business can be exciting, profitable and successful. Good luck and happy growing! (Article courtesey of Crelogix)