Rapid Growth may be Harming your BusinessCan growth be bad? Well, considering all the importance placed on margins, ROI, increased sales figures, etc. it may seem like growth is the only thing businesses should be striving for. After all, from the time an organization open its doors, growth is the goal. As a business makes its way towards that dream of the break-even figure that every start-up longs to achieve, discussions about growth are always first and foremost. However, after your company has crossed that initial stage of growth, what’s next? This is a vital question to consider. In fact, companies who ignore this question and are unable to keep pace with their own growth may ultimately end up imploding.

The Risks

A cash crunch is the first bump in the road for many fast growing companies. Often, businesses spend money on upgrading their infrastructure or operations when they should be financing their growing sales. A company that grows too fast may not have the budget to maintain the number of sales and level of service expected of them. This is just one example of rapid growth hindering the long term sustainability of an organization.

Even a corporate biggie like McDonald’s gets it wrong sometimes. For years, they depended solely on their sales figures and ignored the warnings of market analysts, who repeatedly stressed things like market saturation and declining profits. In 2003, they admitted that they were no longer a growing stock after years of failing to heed the warning signs.

Moreover, rapid growth also means rising expectations of customers. In any business, not being able to fulfill a loyal customer’s expectations is one of the biggest failures. Once a business gets the reputation of failing the customer, it is almost impossible to win back or regain their former level of confidence in your business.

Size Matters

The risks of growth are different for organizations of different sizes. For instance, a smaller start-up will take less time to show the warning signs than a corporate giant who has been in the business for a long time. It is easy to understand why. In the case of bigger organizations, apparent signs such as operational failures, underdeveloped infrastructure, or even shortage of human resources usually won’t start showing unless they have been present for years and the risks of growth have started to hollow out the organization’s core.

Four Ways to Control Growth

Good leadership and wise decision-making stand between a company’s profitable growth and the damaging risks of growing too rapidly. Leadership skills need to be scaled up to meet growth patterns. With growth, organizations encounter a number of possible and definite changes. Businesses require the right leadership, with a specific skill set, to deal with these changes. When there is growth, the extent of involvement in day-to-day operations may become less important for an entrepreneur. They must be able to step into a greater and more responsible role of guiding the organization, armed with a strategic path.

Don’t become too bogged down with the statistics of growth. One of the greatest risks to a business is over spending, or simply spending for short term profitability. No matter how tempting it may sound, spending should be controlled and directed towards developing the operations and upgrading infrastructure. This will ready the organization to keep pace with growth rather than running after it.

Customer service cannot be ignored at any cost. Make sure your employees understand that it is more expensive to acquire a new customer than to retain one. Word of mouth is like wildfire; if you serve your customers well, positive feedback will bring you more customers as a ripple effect.

When possible, outsource services to companies with the required expertise. Compliance and legal issues often take a longer time and more effort to address when your company is growing at a fast pace. It becomes difficult to keep an eye over these minor but significant areas. Outsourcing these tasks to experts not only saves you resources, it allows you to focus on other important areas of your business.

While growth is most often considered a sign of a successful company, unplanned growth can go horribly wrong. Therefore, to ensure rapid growth doesn’t backfire, you must have sound footing and a solid plan to support your growing company.

What do you feel are the biggest challenges to business “growth spurts”? How have you dealt with these challenges when they occur? Give us your thoughts, we would love to talk about them.

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