It’s great news if your business is growing quickly! But will things move so fast that you’ll struggle to keep pace? It’s a real possibility – so we better give it some thought. Knowing the potential pitfalls in advance and understanding how to mitigate them can go a long way in writing a successful growth story.
Pitfall #1: You may hire too many bad employees or misfits
Business growth is directly proportional to hiring employees for most businesses – more work means you need more pair of hands. The risk of hiring the wrong people in your rush to fill up positions is very real and many fast growing business end up in this situation.
Unfortunately, there are no shortcuts here – careful hiring is your only solution. You can’t cut corners when choosing your winning team – you have to give each hiring process the time and resources it needs, and most importantly get the right processes in place. To step up recruitment, explore multiple avenues. Campuses are great places to hire bright, young talent. Similarly, if you can afford it, a recruiting agency may provide you the much-needed support. And, maybe outsourcing some of the work can also make a difference?
Pitfall #2: You may experience a cash crunch on the back of increased expenses
The harsh truth is that your growing business will run tight on cash. Expenditures will need to be taken care of before sales are actually realized. If you don’t manage you working capital and cash flow smartly, you may very soon run dry!
The solution lies in planning. Spend some time doing some basic maths to see you’ll have enough money in the future to keep running your business – draw out a cash flow projection for the coming months and years. Estimate how much will be your cash outlay and how much will be coming in. See if there is a way you can improve receivables by asking for deposit payments while taking orders, performing mandatory credit checks on first-time non-cash customers and issuing invoices in a prompt manner and following up slow payments immediately. I would also advise you to communicate regularly with your bank and also have back up funding solutions.
Pitfall #3: You may lose sight of the big picture – a healthy profit margin
Your sales may be moving at breakneck speed but the costs associated with transitioning from a smaller business to a growing one are often underestimated. Result – poor profitability – your business makes no money! Calculate your profit margins in new paradigms regularly, as you grow and add to your expenses. See if the whole system is still robust. Don’t just chase sales, look for sustainability, which comes with healthy profit margins.
Pitfall #4: You are sacrificing customer satisfaction for fast growth
A very bad idea to say the least! And yet, it very often happens that fast growing businesses lose sight of their customers and keep reading numbers, which look good on the paper. Your increasing sales do not give you the license to ignore the single most important stakeholder in your business – your customer. A bad word of mouth about a service or product can any time go viral and lead to a collapsing scenario. Always lend ears to your customers, and fix issues, if any, quickly. Build robust support processes and operations that form a strong foundation for your growing business.
Pitfall #5: Your employees are burnt out or insecure
Increasing workloads will make some of your employees see red! Managers could feel overwhelmed and yes, as new workers trickle in, older employees will tend to feel neglected or even threatened. In such situation, how do you keep employees motivated? Here are some ways:
– Have a frank discussion with your employees about the temporary high workload situation, motivate them to put in their best, and get them excited to be part of a growing business.
– Don’t hesitate to make difficult choices about which managers should and shouldn’t lead after assessing their performances objectively.
– Link efforts with rewards to keep employee morale high.
– If you are hiring senior people, post job openings internally first and talk to the employees privately about structuring new job positions.
Here’s to your success!
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Go ahead! As long as you give full author attribution as follows:Business Growth Expert Yoon Cannon has helped thousands of CEOs, entrepreneurs & small business owners achieve dramatic results in sales, productivity and profits. Over the past 20 years, Yoon has started 4 other companies and sold 3 of them. She is the author of numerous articles published in major print media and magazines. She is also a popular keynote speaker. Get Yoon’s free video “How to Find Your WOW Factor” at http://www.ParamountBusinessCoach.com. Call Yoon direct at (215) 292-4947.
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