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The Dangers of Fast Growth

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The Dangers of Fast Growth

We get it, you want your business to experience fast growth and you may be willing to do everything possible to achieve this, especially following a period of profitability. The trouble with fast growth is that if too much of it comes too quickly, you can run into some serious problems that could see the demise of your company before it has had the chance to truly become something.

Fast growth may sound great on paper—and indeed it can be—but there is a fine line between this and growth that is so fast so as to be unsustainable.

While profitability and measurable growth are exciting, you should exercise caution and not push too hard for fast growth—it is far better to let growth come incrementally over time rather than all at once.

Dangers of Fast Growth

These are some of the main problems you could face if your growth comes too quickly.

1. Cash flow problems

When your business suddenly grows, you will have a major influx of additional sales. Depending on what it is you sell, this could put a serious strain on your cash flow.

You also could be hit by cash flow mistakes. These are very common and are one of the primary reasons that new businesses fail.

Growth projections that are too optimistic and an inability to understand the difference between your profit and cash-on-hand are two potential mistakes that could prove fatal. These can easily be exasperated by the additional work and stress brought on by sudden, fast growth.

2. Overvaluing your sales

It simply is not the case that if you take good care of your sales that everything else will fall into place. Your sales are not the be all and end all. Unfortunately, many business operators fail to understand this.

When you are making strategic business decisions, especially during a period of fast growth, you cannot let sales figures alone influence your decisions. Sure, it is a useful metric but there are lots of other metrics you need to pay attention to, too.

Any decisions you do make should be influenced by solid financial evaluations, not just sales figures.

3. Bringing in lots of new and unsuitable staff

When you do grow, you will need more staff. Not only is it difficult to gauge how many new staff members to bring on—this is an entirely different issue—the pressures posed by fast growth can push you into making sudden hiring decisions. Later, it may transpire that these hiring decisions were wrong and that some of your new staff members are not suitable for the job.

When you are in growth mode, you are rushing as fast as you can to satisfy demand and this can easily lead to bad staffing decisions.

4. Not scaling up customer services

Just like your core team(s) need to grow alongside fast growth, your customer service team does, too. In fact, it is arguably more important to focus on scaling up your customer services team first because these are the people who deal with your customers, the individuals responsible for your growth.

As your business grows and you begin to make more sales, there will be an increased demand placed on your customer services representatives. If you cannot live up to the good reputation you already have, though, because your customer services department is struggling, you may find that it is somewhat harmed.

5. Making management mistakes

As your business grows, especially if it is growing fast, one of the most important and beneficial things you can do is take a step back and look at the overall bigger picture.

It is often the case that founders, and business operators get caught up in the miniscule day-to-day details so much that they are unable to think about the long-term. If during a period of fast growth, you are not looking at the bigger picture, you will not be able to prepare for it and if you are not able to prepare for it then you will almost certainly fail.

The adage goes “if you fail to prepare, be prepared to fail” and it applies here.