When your small business takes off, it is exciting. But what if the growth gets out of control? Growing too fast and unexpectedly can actually be detrimental to a new company. But there are ways to prepare.
“If your company is growing too fast for you to keep up, you should either make some new hires or start to question if you're attracting the right sort of business,” explains Rasheen Carbin, Director of Business Development for MBAprojectsearch.com. “Is this growth good growth, meaning is it profitable, sustainable business? If not, then you need to back away from it. It's hard to turn away revenue, but sometimes you must.”
Often small business owners are afraid to turn away customers for fear of alienating clients and for missing out on much-needed revenue. But if you cannot handle the business it is better to decline than to take it and perform poorly. “Turning down business is not always a bad thing. With any business, but especially new business, you have to ask yourself it fits in with your organizational competencies and mission. Also, some clients or revenue streams come with headaches you can't or don't want to manage,” Carbin points out.
If you are ready for a growth spurt, growing fast can be a positive for a new business. “Growing too fast can be a good thing actually, if you can ramp up quickly and manage the period of chaos. Growth is always painful and can be disorienting. Growing too quickly can force good change on your company,” offers Carbin. “Maybe you need to upgrade your equipment or get new training. Maybe there is a unique opportunity to consolidate a bit of your industry. You always need to be looking for opportunities to exploit and in order to do that, you may have to grow too fast.”
Businesses should avoid these three growth mistakes, notes Carbin:
1. Taking on too much debt;
2. Assuming the revenue will come if they just invest in capacity;
3. Not being prepared for the demands of growth, i.e. hiring and training, increased costs, trying to preserve the company culture.