But start growing faster than you can manage, and it can lead to all kinds of issues. Like running out of cash. And not having the right people in the right roles – which are two of the top three reasons young businesses fail.
We’ve run the growth gauntlet ourselves. In recent years we’ve expanded our customer base to over 600, and our operations to over ten countries.
What we’ve learned is this: the best way to handle rapid growth is to be aware of the potential risks, and tackle them as early as you can…
Risk #1: Changing goals
For small businesses, success often depends on having the market-awareness – and guts – to rethink your objectives and adapt your strategy on the fly. (Anecdotal evidence suggests around two-thirds of startups partially or completely transform themselves to succeed.)
But there’s also real risk attached to changing goals too fast, or too frequently. First, there’s the chance you’ll re-orientate around a new opportunity without fully understanding how valuable it is, or how difficult it’s going to be to exploit.
Second, unless you make sure your new strategy is effectively communicated throughout your organization, there’s a danger you’ll end up with a business that’s pulling in two directions at once.
How to avoid this risk
When communicating your new business goals:
1. Explain the ‘why’
Being clear about the thinking behind your business’ strategic shift will help to unite your staff around your new objectives.
2. Focus on the practicalities
Spend less time communicating your new goals, and more time explaining the specific tasks that need to be completed if you’re going to meet them.
3. Record your strategy
In addition to verbal briefings, formalize your new strategy into a document, share it with your staff, and store it somewhere accessible (i.e. your SharePoint, Dropbox, Intranet etc.)
Risk #2: Catastrophic cashflow management
Cashflow problems are the #1 killer of growing businesses. (In the US and the UK, they’re responsible for 82% and 90% of all small business failures.)
Here’s what happens. The new business starts flooding in – so you look to expand your operations to keep pace.
You realize you need to source and hire eight new people. And buy them new desks, chairs, laptops, and smartphones. And a few extra software licenses. And, of course, you need to move to a larger office.
But none of your customers have actually paid you yet – and so, your cashflow says ‘no’.
You’re left with three unappealing options. You can either look for a loan, turn away some of those customers, or run your team ragged to deliver a second-rate service.
How to avoid this risk
There are a simple few tricks to keeping your cashflow (and business) healthy:
1. Make sure you’re forecasting regularly – there are plenty of tools out there to help
2. Reduce the number of days you require your invoices to be paid within
3. Bill your customers as early as your business model allows
Risk #3: Increasingly undefined roles
When you’re growing fast, new jobs have a habit of appearing out of nowhere.
For example, imagine you’re running a small company that wants to grow abroad. You know you need a new website and a more coordinated, scalable approach to generating leads.
But with no one to head up this effort, your Operations Director quickly becomes your Marketing Director too. At the same time, you find yourself trying to get to grips with international data privacy laws. Who’s going to make sure you comply with these rules?
Simply put, rapid growth means more fire-firefighting, and more responsibilities, for everyone. It stretches teams and resources and puts both morale and productivity on the line.
What’s more, as soon as your staff’s responsibilities extend beyond their job descriptions, maintaining a clear view of your operations – and how they’re driving you towards your goals – becomes much harder.
Agility, efficiency, and accountability can all be compromised, as key tasks get duplicated or left unaddressed.
How to avoid this risk
A rigorous, transparent approach to workload management is key:
- If you don’t already, start tracking how your staff spend their time at work
- As new tasks and responsibilities arise, thoroughly assess the time they’ll take to complete.
- If it’s clearly a full-time job, and you can afford to hire, don’t try to save money by asking existing employees to pick up the slack
- Consider recruiting freelancers. Or maybe a freelance account director can take on some non-strategic marketing tasks like research or even campaign planning, to give your Marketing Director some breathing room. We’ve used freelancers for one-offs jobs and we’ve integrated them into our teams. In both cases we’ve seen great results.
- If you do have to give the work to an existing member of staff, make sure you’re not overloading them. Actively check they've got the time to do it, and look for opportunities to reduce their existing workload (e.g. by reallocating routine tasks to a less senior member of staff).
- Update job titles and descriptions as soon as responsibilities change, and make sure this news is communicated throughout your organization.
Risk #4: Ill-considered business processes and tech investments
Rapid growth brings new business needs, so you hastily develop new business processes to meet them.
But then, as you grow some more, you realize that those processes don’t scale. They exist in their own little siloes. Worse, when the person who dreamt them up leaves your company, you realize they’re utterly impenetrable to the rest of your team.
It’s a similar story when it comes to hasty technology investments.
Let’s say your fast-growing business needs a CRM. And it needs it yesterday. You decide to quickly procure a basic solution, to meet your immediate needs.
Then, six months down the line, you realize you want to do Marketing Automation – which, of course, your basic CRM doesn’t support. So you invest in a standalone marketing solution, migrate your customer information, and start running two sets of CRM data in parallel.
Another six months later, you realize your CRM is struggling – your customer base has grown too big. So you’re forced to invest in a new CRM and swallow the expense of staff retraining and data migration.
Worst of all, you know all these mounting costs and inefficiencies could have been avoided – if you’d really thought about your future needs when you made that first investment.
How to avoid this risk
However pressing your business’ needs may seem, it pays to plan ahead. Whenever you create a new process or invest in new technology, ask yourself:
- What need are we solving? What other ways could we solve it?
- How is this need going to change over the next six months? How about over the next five years?
- How will we transfer the knowledge and skills to keep our new process or technology running?
That’s it. Here’s to fast, sustainable growth!
There’s nothing like the thrill of leading a fast-growing business. So keep a lookout for these risks, and remember to relax and enjoy the ride.
We managed to nip a lot of growth-related problems in the bud by integrating our sales and marketing teams. This helped us communicate more effectively, create better processes, balance workloads, and more.