Most businesses start out small and hope to grow over the years. In fact, growth is imperative if a business wishes to continue. However, there are some typical mistakes that small companies make in their attempt to expand their enterprise, that actually cause the business to tank. Take a look to see if you have been making some of these mistakes that have caused the growth of your business to regress instead of progressing.
- You didn’t plan and strategize the expansion. Growth doesn’t just happen on its own. You may be having success with your sales, but to actually grow and expand, you need to have a plan. How you are going to invest that new money. How you will reach more customers. How you will keep up with the demand. How you are going to manage your cash flows to keep the business going. Can the company scale – manpower, infrastructure and technology?
- You’re trying to grow at an unnaturally quick pace. Growth has to come organically. Only then will it be sustainable and can you cope with all the new changes. If you try to rush it, you don’t give the business time to keep pace with itself and you stretch yourself thin in trying to keep up. When it is gradual, you have the time and bandwidth to understand the nuances of each new step you take, to evaluate the business and correct mistakes, and to build the foundation of the business solidly.
- You’re expanding the business based on your whim instead of market realities. You must understand that your business is successful because you have been catering to the needs of your customers. If you wish to expand, you must study the market, understand what customers need, and align all the new plans to that. Drawing up a buyer persona from your imagination means you are essentially ill-informing all your future marketing and sales strategies, your efforts won’t resonate with the new clientele, and you set yourself up to fail. Instead talk to existing customers and do your market research.
- You stay in the old ways because they were once successful. Change is hard but inevitable. And with technology swiftly moving ahead and impacting every industry in its path, it becomes all the more important to keep up with the trends in your industry or get left behind. Because what is certain is that with the changes in technology come the shifts in customer preferences and the way they react to your business.
- As mentioned earlier, with rapid growth comes the incapacity to meet demand. This is because it leaves you unable to bridge the gap in manpower, skill, resources, inventory, infrastructure and technology. If you can’t meet these demands, your very frustrated customers will slip into the eager and capable arms of your competitors!
- On the other hand, have you over-appraised the value of your business or overestimated the potential demand?! In business, one must always know their own worth. It is one thing to have the potential for growth but blow it by aggressively pushing it faster than it can cope. But it’s a whole other thing to assume the potential for growth when really there is none, there is very little, or the time for it hasn’t come yet. Balance your optimism with reality. Project your growth trajectory based on facts and not your own hankerings.
- Neglecting or failing to account for potential problems can spell doom even before you have a chance to take off. We’ve already clued you into the fact that growth and new territory mean new challenges to deal with. Let’s say you’re expanding your restaurant. Do you have the necessary permits and health licences? Have you budgeted for new cutlery, new kitchen equipment, and especially the additional free accessories and trimmings (like paper serviettes, doggy bags, even toilet paper)? To anticipate a situation helps you plan for its solution.
- The most common and dangerous mistake in history was underestimating the opponent, overestimating the friend, and forgetting the competition. As important as it is to remember the worth of your own business and services, remember you don’t have a monopoly on the playing field. You might be the best on the current level, but when you plan to expand you play on a new field with different competitors, and they may be old in the game with better industry experience. What is your USP? What is theirs? How can you match their game or, better still, beat them with what you bring to the table?
- You expanded without making your mark, and now your business is just another run-of-the-mill enterprise. We’ve already said that you need to clearly define your USP to see how you can make a difference in your industry. But this is also necessary to mark your territory and set you apart from the others. This will attest to the distinct space you fill in the market and the clear-cut need to service.
- You either miscalculated or underestimated the moolah necessary for this undertaking of expansion. Growth is commonly equated with profit. What we sometimes forget is that before it is lucre it is a costly affair. Have you planned how you will get the necessary financial backing to support this endeavour? After spending on the new developments, will you have enough hard cash to run the business’ day-to-day operations? Many profitable businesses still go under for the paradoxical reason that while they make profits they don’t have the cash flow to run daily operations. And bad cash flow could be because of bad invoicing or bad AR collection processes.
There are a zillion mistakes waiting to happen when you decide to expand your small business. But why make the historically common ones that have always dealt the same flunking results! Just a little preparation, a little effort to build the essential components of a strategy to burgeon growth, and some common sense, and you can save yourself from silly mistakes that would be the difference between a launch off or a rapid downward spiral.