It’s easy to get caught up in the excitement of a rapidly growing venture. However, when a business grows too quickly, it significantly increases the demands—and if the demands are higher than the ability to supply, your business can quickly fail. Fortunately, there are specific signs to look for to determine if your business is growing too fast. Here are four:
1. You Don’t Understand Your Finances
The smaller the business, the easier it is to track cash flow and numbers. You’ll be able to monitor your funds and quickly know the total expenses going out. However, once you get to a certain sales range, it’s harder to keep track of the numbers in your head. For this reason, it’s important for business owners to have qualified accountants on staff and maintain frequent communication with them regarding your business’ financial data.
2. You Are Struggling With Staffing Issues
If demands continue to increase while the number of staff remains the same, then employee burnout, low morale, and team conflicts are sure to follow. Placing too many burdens on staff will cause some of them to leave, placing a greater burden on those remaining. Another potential hazard is hiring the wrong staff. The faster the company is growing, the greater the issue of hiring quality employees. Company culture is important. You want to hire the right employees who reflect the core values you’ve set forth.
3. Previously Happy Customers Are Dissatisfied
The quicker the growth, the greater the importance of ensuring high-quality customer service and satisfaction. In the face of increasing demand, it’s easy to get disoriented with products and services. Even if you’re gaining new clients, you may be in danger of losing old ones due to a loss of customer priority in the business. New ventures often find it difficult to keep up with high demands while also remaining an effective customer-centered business. Too often, long-term customers fall through the cracks, affecting loyalty and retention rates.
4. Your Leadership Is Failing
In today’s competitive and ever-expanding business environment, companies can’t afford to have poor leadership and unqualified managers spear-heading the potential success of the business. The faster the growth of the company, the less attention is paid to ensuring appropriate leadership. Common leadership reasons for business failure are as follows:
- Lack of vision. The leader in charge must clearly define the company vision and mission statement. If the vision is not in alignment with the corporate targets and strategies, the business won’t continue to flourish.
- Lack of character. Without strong character and ethics, a leader can’t earn the trust, cooperation, and loyalty of his or her employees. In a fast-growing company, employees are already likely over worked and burned out. Leaders who have a strong sense of integrity and concern for the welfare of their employees will boost morale and give employees greater motivation to continue working.
- Lack of execution. Leaders are responsible for making sure that the necessary resources are procured and allocated to minimize risks. If a leader is juggling too many responsibilities due to high levels of demand, then he or she won’t be able to invest the appropriate amount of time in managing risk.
Growth is great—just be sure to take care of your company during those stages. It’s much easier to hire and care for a company while it develops than it is when business is booming and you’re shuffling to keep up. Be on the offense, expect growth, and handle it as it comes.
Author: Joshua Eke is the Business Development Representative at Factor Funding Co. and author of The Intro to Factoring. They increase cash flow for small businesses by providing accounts receivable factoring, asset based loans, equipment financing and other ancillary services.