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Understanding the Risks Of Rapid Business Growth

  • Common problems caused by rapid business growth
  • Financial problems, poorer customer service, overworked employees, and more
  • Grow at a sustainable pace to handle the challenges that come with expanding

Once your business becomes profitable, you’ll naturally be interested in expanding it by offering new services, opening a second location, or otherwise creating new revenue streams. But if you grow too quickly, you may face problems with your finances, customer service, staffing, or other aspects of your business.

Here are some of the common pitfalls you may encounter if you try to grow your business too quickly. Carefully planning your expansion, talking with business professionals about your strategy, and preparing for potential financial shortfalls at the outset are all options for achieving sustainable growth.

Cash flow problems

Growing your business to increase your sales means you’ll face higher expenses as well. In many circumstances, your monthly expenses will exceed your operating capital, and your revenues need to be sufficient to keep your books balanced. If your collections aren’t keeping pace, you could easily face a crunch in your operating capital.

Several other costs could cut into your profits as well. These could include paying employees overtime to complete tasks related to the expansion, stocking a greater amount of inventory, or moving to a larger and more expensive office space. Your profits will also take a hit if your sales projections are unrealistic, resulting in lower than expected revenues.

Employee stress

When you expand your business, you and your employees will both need to take on additional responsibilities. If you try to take on too many tasks yourself, you’ll no doubt end up feeling stressed and impeding your work processes. While your employees can be a great help during an expansion, trying to grow too quickly will may put them under too much strain, leaving you shorthanded and deprived of experienced personnel.

Disorganization

Any expansion will have a lot of moving parts, such as managing a fulfillment system, hiring new workers, or updating a marketing strategy. If you grow too rapidly, it will be more difficult to set up this infrastructure and have it run smoothly. There’s also the greater possibility of disorganization if workers can’t effectively team up on projects or if workflows are disrupted.

Hiring new workers is often part of a business expansion, but the process of advertising a position, interviewing candidates, and onboarding and training a new employee can be very time-consuming. This could leave you spending less time focused on other tasks that need to be completed as part of the expansion.

Poorer customer service

Growing too rapidly may result in your staff getting spread too thin, an inability to fulfill orders, or other issues that lead to negative customer feedback. This, in turn, will tarnish your company’s reputation and make it more difficult to retain existing customers and find new ones.

Scaling your customer service should be part of any business expansion. Customers always appreciate personalized, helpful responses from a business, and losing the ability to provide this will limit your chances of success after an expansion.

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