Business growth and expansion is always good – unless it happens too quickly. Yes, too much business growth can actually be bad especially for startups and small businesses, and rapid, uncontrolled business expansion can have negative repercussions in the short as well as the long-run.
I know, it makes no sense and actually sounds counter-intuitive, right? Because businesses exist to make more money and grow with the passage of time.
And while expansion is always good, what smart business managers and entrepreneurs should look and strive for is ‘controlled expansion’.
Here are signs that your business is growing too fast, and things might be getting out of control. These are some of the most common problems associated with startups, and it is essential to know these signs, because uncontrollable expansion is the easiest way to go out of business!
Sign 1: Your business expenses outweigh your revenues
When money going out of your business is more than what’s coming in, you know you’re in trouble (or headed towards it at full speed)! For a business, cash-flow problems can stem from rapid expansion because a growing business translates to growing business costs. When a business expands, so do it’s expenses, and if cash going out of your business is more than what’s coming in, you might be forced to borrow and take on debt, which is never a good thing. Ideally, a startup should be self-sustainable, which means that all business expenses should be catered for through it’s revenues.
Sign 2: There’s a growing number of customer complaints
A increasing number of customer complaints and negative feedback is one of the biggest signs that you might have to step back and reassess how you’re doing business. A small business with a small number of customers, for instance, can easily provide individual attention to each one of them, and produce tailor-made solutions for them. When a business grows, however, it may be forced to cut corners, which results in an increase in customer complaints. Above all, such a business fails to address these complaints.
Sign 3: Your employees are overworked, and unhappy
Are you overworking your employees? Are your employees unhappy and as a result, are productivity levels slipping? If your business is growing uncontrollably, naturally a large proportion of that burden – or added burden – will have to be borne by your employees. To keep up, they might find themselves working late, for instance. This usually results in a dip in productivity, and a rise in employee absenteeism and turnover – all of which can have a negative impact on your business. You may find yourself occupied with hiring and training new staff, when other much more sensitive and important aspects of your business might need your attention.
Sign 4: YOU are overworked and unhappy
If you’ve been working 24/7 in order to manage your business and keep up with the demand and the ever-increasing needs of your business, you might be overworked as well. The truth is that along with your employees, you too need time to relax and overworking yourself will just make you hate what you do. So if you’ve not seen daylight in a while, and find yourself working 80-hour weeks, you might end up getting burnt out before you know it.
Sign 5: Your suppliers and other vendors can’t keep up
Often times when a business grows too quickly, suppliers, vendors and other partners might get caught off-guard and hence may not be able to keep up with the increased number of demand for raw-materials and other resources essential for the functioning and running of your business. In such cases, it might be a good idea to add to your list of suppliers, or get in touch with suppliers who might be able to cater to your needs in a better way.
Sign 6: Your infrastructure, systems, and process are redundant/can’t keep up
As we just saw, growing business demands and needs can place an immense amount of pressure on your employees, on you as well as on your suppliers and vendors. Moreover, it can also render your business processes and systems completely redundant. Lack of proper infrastructure (or investment in) can run your business into the ground. You might, for instance, need to invest in new hardware and software. Over-the-counter software might not be adequate, and old hardware systems may not be able to cope with the increase in demand – hence the need to invest in better software and hardware solutions. In addition, business process – the core of your business – and how your business runs may need to be overhauled.
Sign 7: Your emphasis shifts from quality to quantity
So here’s the deal, demand is on the rise, and supply just can’t keep up. What do you do? One of the biggest red-flags for expanding businesses is when they start prioritizing quantity over quality. Your customers will notice this shift in priorities, and you will end up losing business. Never lose sight of what makes a business successful: it’s emphasis on providing quality and good value-for-money.
Sign 8: You start losing customers
Customer retention is essential, and something that we’ve spoken about at length before. Your business’s ability to keep existing customers, while adding profitable ones, is a benchmark of it’s success (or inversely, it’s failure). If your customers start feeling that they’re not being given proper attention, their complaints are not being handled properly, and that there’s a dip in quality of your products and/or your services, you might end up losing customers. This will negatively affect business expansion, and it might be time for you and your team to step back, take a breather, do a bit soul-searching and see why you’re losing customers and what you can do to win them back.