Do you dream of a fast growing business?
Having more business is great, but having more business than you can handle is a form of failure.Tweet This
You might not expect it, but a business that grows too fast can be a bad thing. A business which grows too fast can not only hurt your business but can destroy your business. Many businesses have success beyond their abilities which results in disaster.
There is a learning curve with any growing business. Running a business that grows too fast is like drinking from a fire hydrant.
Consider the following for a fast growing business:
More revenue covers up mistakes.
There are companies that are excellent sales organizations. Generating more revenue is not a problem. They have built sales funnels that work. Their revenue is growing quickly. But, growing your revenue quickly is not all good news. More money coming in can also cover up a lot of mistakes.
Fast growth amplifies errors.
When your business is growing too quickly your mistakes are also bigger. Let’s say you have been hiring more people than you could afford. When you only had one employee it wasn’t such a big issue when you had 30 people on the payroll. When your business grows too fast the errors you make turn into larger errors. You might not feel the negative impact of your mistakes immediately, but they will end up hurting your business nevertheless.
Here are some examples how growing your business too quickly can hurt your business:
- If your customer acquisition cost is too high, you might not have noticed with you first few customers. If your business grows too fast, you simply won’t be able to grow without running out of money.
- You might hire too many employees instead of increasing productivity.
- You might have inefficient processes.
- You could hire too many of the wrong people in order to satisfy your urge for growth.
- Selling more is great, but not if you compromise on quality.
Why is your business growing?
Yes, sometimes businesses grow without merit. It is not the same as winning the lottery, but similar. You might get lucky and land a client without trying too hard. You might land several new clients without making a real effort. All of that sounds like a lot of fun, but the new business could quickly land you in hot water.
Growth that is not the result of planning and systems is going to hurt your business.
Growing by accident will push your business to its limits. And, there is a good chance that it will be the beginning of the end of your business.
More sales are not the answer.
Many entrepreneurs dream of more sales. More sales are OK as long as you don’t compromise on quality. There is no point in getting more customers if you upset them with slow delivery or poor quality.
Here are some of the potential problems with having too many sales too quickly:
- Your company at its current level might not be able to fulfill more orders.
- In order to fulfill the increased number of orders, you might have to reduce quality.
- If you can’t handle the new orders, you could alienate your new and existing customers.
- Your customer service might suffer.
- You might not have enough skilled people on your team deliver on your promises.
Growing your business too quickly will put additional pressure on your entire team. Once your sales team closes a new deal, it is time for the rest of your team to deliver. If your company is not ready to ramp up business, you are creating a highly stressful environment. If your team is stressed, it is not operating at optimal levels. If all you do is look at sales numbers, you will miss clues about overall stress. You might not notice until it is too late. While you are excited about the new sales figures your team members are already looking for another job, hoping for a less stressful place to work. Too much business too fast will create more stress within your staff and among your customers.
Inability to scale.
Scaling a business requires systems and planning. Many small businesses operate without proper systems. A fast growing business without systems is a recipe for disaster. A one person company gets away without systems, but it will never scale. You should have an honest assessment of how much business you can handle. Before you are ready to scale, you have to create systems. Systems give you the ability to have repeatable processes. Makes sure you have working systems before your business grows.
Customer NO service.
Your sales department is humming. New sales are coming in at record pace. What if operations can’t keep up with the demand? What if you customer service drowns in phone calls and support tickets? Your employees will be overworked and overstressed. Your new customers will be upset because you are not delivering what you have promised as fast as you have promised. Your loyal customers will be unhappy because your team will be unable to service them as before.
We see this all the time. Companies focus on quick sales with a complete disregard for their customers. Don’t be one of those companies whose clients refer to having a “Customer NO Service” department.
Accounts receivable challenges.
Fast growing companies often experience problems with accounts receivables. Your collections simply can’t keep up with your sales. The result is that you won’t be able to finance the growth of your business. The increased financial stress you have put on your business can bleed it dry. There are countless examples of companies filing for bankruptcy while having record sales. Don’t make that mistake.
Managing quickly becomes impossible when growing a business too quickly. Companies that grow too fast are simply unable to manage the flood of new business. Your team members are suddenly required to wear too many hats. Recruiting and training new staff will take time. It is not as simple as increasing the flow of your kitchen faucet.
Rapid growth will lead to an increase in waste. You might rent too much office space too fast. You might order too much inventory. Or, you might hire too many people who take too long to become productive team members.
Here are some alarming signs you might face with a business that is growing too fast:
- Customer complaints are higher than usual.
- You are having cash-flow problems. Basically, there is more money going out of your business than coming in.
- Your employees are overworked.
- Your team members are more stressed than usual.
- You are having trouble maintaining adequate inventory.
- Your systems – or lack of – are unable to respond to the higher demand.
- You can no longer provide excellent quality service in order to keep up with demand. Quantity beats out quality.
- Your customers are firing you.
Growing your business at the right rate is an art and science. There is such a thing as growing your business too fast. Successful entrepreneurs are able to figure out an optimal rate of business growth. Growing a business of any size a challenge. You have to set realistic goals. Create systems to support your goals. Then, deliver.
photo credit: Night Moves
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