In a nutshell: Growing quickly is a reason to celebrate — and a reason to be cautious! Navigate high-growth periods with these three tips.
You wouldn’t be in business if you didn’t want it to be successful. But, sometimes, small businesses struggle with scaling quickly enough. In times of rapid growth, you’ll have to be agile and decisive. According to Fortune’s“Why Two-thirds of the Fastest-Growing Companies Fail,” The Kauffman Foundation and Inc. conducted a study of the companies that appeared on the magazine’s list of 5,000 fastest-growing companies. It found that five to eight years after appearing on the list about two-thirds of the companies had shrunk in size, gone out of business or been disadvantageously sold. Here’s how to avoid the most common pitfalls of growing quickly.
Analyze your Strengths
The first step in dealing with your booming business is to find out why it’s suddenly doing so well. Customers can lend insight into this if you’re not sure, but hopefully you have an idea what’s driving the growth. Conducting a SWOT (strengths, weaknesses, opportunities, threats) analysis will be helpful to hone in on how your business is standing out from the competition. And it will point you in the right direction to focus on your strengths and take advantage of opportunities. You may discover customers feel like your customer service sets you apart or your product is superior. Whatever it is, you certainly want to protect this asset as you continue to expand.
Take Care of Existing Customers
It’s exciting to see your customer base grow, but don’t forget the people who got you where you are today. According to Forbes’“Acquiring New Customers is Important, But Retaining Them Accelerates Profitable Growth,” it’s less expensive to keep a current customer than acquire a new one. And by keeping current customers returning to your business, you build on a revenue foundation that is more profitable and predictable. The longer the customer lifecycle, the better. So, keep a close eye on customer satisfaction, and be sure that while you’re innovating, you’re still appealing to your “oldest” customers.
Hire the Right People
The first rule of hiring during times of rapid growth is to do it! Don’t try to stretch your staff to cover the uptick in business. They’ll get burned out and customers may notice product quality is lagging or customer service isn’t as speedy as it used to be. While you are under pressure to hire peopleas the increase in business is creeping up behind you, don’t speed up the recruitment process and end up with unqualified employees. According to the Society for Human Resource Management’s (SHRM) “Placing Dollar Costs on Turnover,” a nurse making $75,000 in salary and benefits annually costs $41,000 in direct costs and lost productivity when she leaves. So, it’s worth it to do your due diligence and hire only the right people. If you need help, consider hiring a consultant on a part-time basis to help make you a plan or outsource a recruitment professional to scale your hiring efforts.
If you were starting to think you wouldn’t survive your business’s growing pains, think again. With these three tips, you’ll be thriving.