You may have read the title of this post and thought:
“Eh? TOO quickly? Why would that be a problem? I wanna grow and I wanna grow FAST!”
Sure, we all want to grow our businesses and we see everyone around us seemingly building their startups or new ventures at rapid rates.
You may even be thinking you need to grow fast, just to keep up with your competition.
But it’s time to pause for a second.
Of course, growth is good. We need to grow and build to make a success of our work and reach our goals.
So, if you’re getting clients or customers in, along with an increasingly buoyant market, then congratulations! And you may be thinking this is the ideal time to ramp it up.
But by pushing hard too quickly, it could end up being more detrimental to your business that you may think.
So what are the pitfalls of growing too hard and too fast?
Getting more sales in is of course highly important. Without it, businesses wouldn’t survive.
But relying too heavily on just sales as a reason for ramping up your business could be a mistake. If you just take care of sales, everything else WON’T just fall into place.
When evaluating your financial position, you need to consider so much more than your revenue line.
Think about your cost base, the financial impact on other members of your team, whether you would need to make new hires, the economic climate, how your competition would react, the potential requirement to pay additional tax and so forth.
Growing too quickly can result in a raft of financial problems you’ve not even thought of yet.
While your finances need to be managed carefully from a cost perspective, you will need to pay particular attention to your cash position.
As mentioned above, increased sales are generally a great thing, but if these sales are occurring on credit or if you’ve got varying pay cycles of 30-60 days and are waiting for a number of invoices to be paid, cash flow problems could materialise quickly.
And if you’re not organised (see below), tracking down unpaid invoices can cause additional financial issues. It’s gonna get complicated.
Of course, there are solutions to these problems, such as hiring an accountant, although this comes with additional cost or diversifying your client base, as well as building up cash reserves beforehand.
But ultimately, the best solution is to plan well ahead and attempt manage your growth, which helps to limit overspend and keep a sustainable level of cash flow.
You may be used to flying by the seat of your pants, ducking and diving and watching your business take hold.
And while that may have worked well in the early stages until recently, that almost certainly won’t cut it should you wish to expand your empire.
You’ll suddenly have so much more to consider, from a larger customer base wanting higher levels of service to more paperwork and increased financial commitments.
You will need to get highly organised.
You can figure out how to do that here, but this will be especially so if you employ more people, who all need to interact with each other in order to hit deadlines and get work done.
The flow of information from within your business to your current customers, as well as your potential future client base, will all need to be in line to maintain your success. And that incorporates everything from sales, to marketing, to costing, to budgeting to deadlines and to everything!
And this only comes with a highly organised set up.
I’ve mentioned this so many times before, but it’s just so important to get right.
Your current customer base is the reason why you’re where you are now. Forget about them at your peril!
But if you scale your business up too quickly, allowing the service you provide to your current customer base to fall by the wayside is a mistake all too easily made.
And this is especially so because it is very easy to do. If you start getting negative feedback, that’s a strong indicator that your growth is getting out of control.
If you’re always chasing the next customer and you suddenly get an influx of many, you will need to service a lot more people; without changing your system, something has got to give.
Allowing customer service to slip can come back to bite you hard and your rapid sales growth could very feasibly drop as fast as it rose.
Maintaining high standards of customer service for ALL current and past customers will be key.
The way you interact with your customers and employees is likely to change as you scale up.
Technology plays a key part of this and ensuring that the business has the right tech in place to enable a smooth transition will be important.
You’ll need to consider everything from whether you have enough storage and how you will communicate with your employees on a regular basis, especially if they are not based in the same location as you, as well as the potential need for cloud based applications or ecommerce software.
Every business is different and each will have their own requirements.
So, you will need to have a clear understanding of what your business requires before you ramp up, not just in terms of the tech itself, but also its impact from a cost perspective.
Not being able to do this from the outset could see your business crashing down around you.
When your business is growing faster than you expected, you’ll likely only be focused on meeting your targets for tomorrow or at best for the rest of the week.
Time is tight and just as long as you’re able to tick off that list of to-do’s, it’ll be alright, right?
So, when do you start thinking about the future of your business? If you growing too quickly, how do you make plans of where you want to be over the next few years?
Your long-term plans could now be non-existent, which makes it very easy for your business to deviate from its path and make mistakes that could be difficult to fix.
If you think that your business is growing to quickly, just take a step back. Slow down, just a little and consider answering the following questions.
Are you hitting the goals you set out at the start – for the month or year?
I'm Dan. After over 20 years working in finance, including starting my own regulated business and then transitioning to a copywriter, I've decided to share my knowledge, experience and business views with you.
My mission? To empower you make better decisions in your business and personal life. You'll find me talking about business, success, marketing techniques and how this connects to well-being and mindfulness.
Given that I'm still passionate about investment, you may also find some personal finance guidance (not advice) here and there. Enjoy!