Having worked with small businesses and startups for over two decades, I can say that growing a business is not for sissies. There are many pitfalls and even if you do everything right, sometimes circumstances out of your control can knock you off course.
One challenging aspect of a startup or even a business that wants to grow is knowing the right pace to pursue the desired growth. The best path to success is to grow the business proportionally. If one component of the business grows significantly faster than the others, trouble could be brewing. Key components to manage include revenue, personnel, marketing and quality.
If your staff outpaces your revenue, you will burn through the cash you have and/or get overextended with credit trying to pay for the staff because you are not generating enough sales (and profits) to cover the expense. Since every business needs cash to operate, running out of it is a death knell. Even if cash is not an issue, adding staff too quickly can affect your ability to properly train them and sustain your business culture.
As you start the business or launch a new product, you may be tempted to really get out the PR and advertise your business. Certainly getting the word out is important. If you do so before your product/service/process is ready; however, your customers will likely experience an inferior product/service quality. This may cause you to lose that person as a future customer, not to mention the other people he will influence with the bad experience. Worse yet, if you ramp up the marketing without a good understanding of your target markets and how to message to them, you risk wasting a lot of dollars with little or no return.
Now you would think your sales growing faster than everything else would be a good thing, right? True to a point - but not if the growth is too fast. Troubles arise when you are selling more product or service than you can support. You may not have the trained staff in place, you may not be able to get sufficient quantities of product, or you may end up supplying a product or service of inferior quality. Not to mention the cash crunch you could experience if you are selling to customers on terms.
Knowing your personality, you may be able to predict potential problems. Are you a super salesperson who might over-commit your business’ capabilities? Are you in a hurry to build your team than bring on staff as they can be supported? Are you a ‘big picture’ person who may not tend to the details needed to guarantee a quality product and customer experience?
While these thoughts are straight forward and sound like common sense, business owners can be prone to these kind of mistakes if they haven’t given thought to their route to growth. As you work to catapult your business to the next level, have the bootstrap mentality. Grow as you can support it and keep these components in sync for a prosperous operation.
Kelly Weaver is the Regional Director of the Small Business Development Center in Aberdeen which offers free, confidential business consulting to start up and existing businesses. She can be reached at (605) 698-7654x144 or kelly@growsd.org. The Center is hosted by GROW South Dakota.
