Business growth is the key to business success. To grow sustainably is to grow wisely. Growing wisely is to grow under control. Most often this means slowly but always it means without chaos; controlled growth. Growing too fast ironically could be a problem that puts you out of business.
Growing too fast, growing with your business out of balance with itself (sell more to make more), growing without a plan, sends many warning signs. Some of these signs are:
Outgrowing Capabilities This often happens with a grow, grow, grow, strategy. You find yourself with more orders than your business can effectively handle. A simple question should be asked when growing – can you provide or produce what you are selling at the same or less cost? If the answer is no, then you need to find out why before “growing” further.
Overlooking Small Mistakes You might be selling a lot and those sales could look good. But with rapid growth comes error. Error is simply mistakes and mistakes cost money. Further, they can damage your reputation with your clients. If you find error increasing (and if you don’t track error you should) then you need to understand why. Small mistakes add up to big dollars in lost profit.
Too Much Success Have you ever heard the expression “They are successful in spite of themselves?” Many small businesses have this problem and while some would suggest it is a good problem to have, not understanding why you are successful can ruin your business. Further, success sometimes breeds complacency and some business owners and leaders let their guard down when success happens. Success means you stay on top of your game and don’t let up, complacency leads to bad business.
Of course, there are more but primarily a business growing out of control will experience some, if not all of these.
Growing safely and in control means doing things that may be different than what you are now. Measuring your capability, your processes and how you manage them. Ensuring that your customers are satisfied and that you are investing in them as much as you want them to invest in you. Managing how you order materials and how you manage their use, bulk, for example, isn’t always better. In a previous blog, I shared five key points to remember when managing your growth –
- Ensure all parts of the business work together.
- Your sales and marketing team are focusing on what is right for the entire business and not just more sales.
- Your customer service and customer retention team are included equally in all decisions about sales, marketing, product, and production.
- The capacity of your product and production management is included in those same decisions.
- Your team is well trained and capable of the growth.
You must also pay close attention to your cash. Having thousands of dollars in receivables is not cash and it does not mean you have money. Until it is paid, the check clears the bank and the customer doesn’t come back for a refund, it isn’t cash in your business. Poor cash management leads to disaster. How can you manage and operate your business and avoid or eliminate the cash flow problem? Here’s how:
Learn how business works. Use resources available in your community to help you run your business effectively and profitably. Tech schools and Universities are a good start. Many have free resources available to get you started but understand information that is free is often very limited and generic. It may not be for you.
Understand how YOUR business operates. How do you make money, what is your cost of goods sold, how do you get customers and how efficient is that process? Do you regularly track things like waste and error? How do you retain customers and do you offer an upsell when they buy from you?
Know the difference between need, want and “I can get that later.” Do you need an office? Do you really need that employee or can you pay someone on a project basis for the work? Do you know how to account for your business finances or is a book keeper a better more efficient idea?
Lastly, when you find yourself doing the work you have hired others to do it’s time to stop and think. As the business owner, you need to be managing, not hands on working. If you don’t have enough manpower without you also working, it’s time to either replace existing employees who are not productive enough or hire additional employees allowing you to focus on the business.
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