Growing a startup is easier said than done. According to Statistic Brain Research Institute, more than 50% of startups in the United States don’t make it through their first five years of operations. This goes up to 70% after ten years. If you are soon starting a business, you might want to keep this fact in mind.
There are many reasons why businesses fail. These include a lack of clear objectives for growing it, hiring the wrong people, and cash flow issues. Rapid growth is also notorious for bringing down businesses.
While growing fast is a dream of many startups, it can also be the greatest curse. How do you strike the right cord? Here are the five realities of achieving business growth fast.
For effective management of a growing business, the owner must surrender control of many of its aspects to other leaders. Unfortunately, it is easier said than done especially when things are accelerating at a faster rate. If you are unwilling to get help in running a snowballing enterprise as a business owner, you will soon feel overwhelmed and hurt the business along the way. To avoid this, give up control of the performance of the business and sit back as you see mistakes and victories happen.
You can easily lose track of your finances
During the beginning stages of your startup, you will have a good handle on your finances. You can go over the books to know your income, expenses, sales, and profit. However, when your sales skyrocket fast, it becomes a little tricky to keep tabs on your financials. Be sure to keep a good track of your budget every day to prevent this from happening. Check your books constantly and see that you don’t make a financial mistake you can’t recover from. In addition, seek expert help when you feel you need it. An accountant will be able to tell you if you are on the right track or not.
You may hire the wrong people
Having a good team behind you can make or break your success as a business owner. On a normal day, getting good employees is not an easy undertaking. Add this to the fact that your business is growing fast and you have a perfect recipe for trouble.
When in the growth phase, your focus is to get employees who can help you make more money so that you can take care of your bills. You don’t have time to vet people all month long. As long as they have certain skills, they can join the company. While you can get lucky with this strategy sometimes, it can also get you in deep problems. The solution? Ensure you know your objectives and compromises before signing any letter.
Cash flow mistakes
One of the main reasons small businesses don’t succeed is because of cash flow problems. These come in many forms including unrealistic growth projections and failure to know the difference between cash on hand and profit. As your business accelerates in growth, you may have more cash at hand at some point and equivalently high monthly expenses. What do you do to avoid running in losses? You need to be able to know the money that is coming in vis a vis what is going out every day. This helps you identify areas where you can reduce expenses to boost your operating capital.
Last but not least, when your business experiences a fast growth pace, you may feel the need to improvise in order to attract more customers. This might have a negative influence on your initial plan to run the operations of your business smoothly. For example, you may need to bring in more manual labor than you had anticipated and end up getting incompetent ones. What if you don’t have the time to redesign your workflow to handle the increased demand for your products or services?
Before things get out of place, ensure that these things check out:
- Your employees are competent
- You can manufacture or acquire new inventory to handle your orders
- Your customer service is up-to-par
- You know the cost of dealing with customers and delivering goods to them
There you have it; 5 realities for achieving fast business growth. If you anticipate a fast growth pace for your business, be wary of these realities. They can bring you down faster than an aircraft would.