Six common pitfalls whilst pursuing growth
Growing your business is usually seen as desirable, a great achievement and a sign of success.
Yet if you’ve cracked the sales and marketing conundrum and have rocketing sales, you still can’t sit back and relax. There are many pitfalls along the road of expansion which could derail your business, or even potentially end it.
If your back office can’t keep up with the rapid pace of sales, you aren’t going to last long, even if you have the biggest market share. You must be able to invoice your customers and collect your cash if you want to survive as a business. Invest in your back office team, as well as the sales force.
Are you delivering what you say you will? If you’re not, your hard-won customers will leave you, depriving you of repeat business and possibly your reputation.
This includes shorting customers of stock due to supply chain issues, or simply not replying to emails or phone calls in a timely manner. As with above, make sure your operations and support teams can keep up with the rate of sale.
Pursuing revenue at all costs
You can always grow sales if you’re not concerned about the cost, or being profitable. However, you will always need cash to survive as a business. Whilst profit does not always translate into cash, being profitable should be on your future agenda, as should generating sufficient cash for survival.
Growing your profits or cash balance also counts as ‘growing’, and if you can improve these without increasing the sales line, you will have made your business much more efficient. So when the sales do grow, they will be worth much more to you.
Growth requires higher stock levels to fulfill higher sales orders, and higher stock levels need more cash to pay for them. Unless your customers pay you before you pay your supplier (and if this is you please do give me a call!) you will have to fund the growing stock levels.
There’s a wide range of funding options including investors, loans, debt factoring, stock financing and overdrafts. You can mix and match to suit your business needs and long term plans.
As you hire in more staff, your original business culture will become diluted. Invest time in recruiting the right staff for your team, who believe in your values and will actively champion your culture and brand. You will spend most of your waking hours with them; they will be responsible for growing your business. Choose wisely. Don’t rush this.
This is the tough one. When you start out, multi-taskers are amazing. As you grow, you may find you need experts in certain fields. Sometimes, an original multi-tasker no longer fits the roles you need doing in your expanded business, and there are tough conversations and decisions to make about their future with you.
Ultimately, you can’t afford to pay staff you don’t really need, so burying your head in the sand and keeping them employed will make your cash position worse and possibly erode other areas, like culture and engagement, for other employees. But there’s no need to do an Apprentice ‘You’re Fired’ – letting go of staff with kindness is a valuable skill.
There’s no magic wand to wave to make growth easy, but if you keep your eyes open for the pitfalls rather than only on the climbing sales, you will stand a far better chance of achieving your goal.