There’s seemingly nothing wrong with a small business growing too fast. In fact, flying at 30,000 feet, a business that’s moving ahead full steam can be a good problem to have. However, your small business that’s outgrowing its parameters has to keep up with growth in a number of ways including hiring, space and risk coverage.
Scaling too quickly can actually have a negative effect on your overall business. Not planning for exponential growth can backfire against your plans to stay in operation. A small business plan should include an understanding of certain limits. Keep an eye out for signs that can be a burden to your business.
Losing Track of Finances
A business that outpaces its intentional capacity can be detrimental to a long-term outlook of scalability. When a business is smaller, its owners have a good command of their financial numbers. Watching cash flow and expenses is easier and you’re able to handle it better. From going over sales to paying your employees to factoring in needful expenses, such as Business Insurance, keeping an eye on the numbers is important. But once you get to a certain sales range it’s hard to keep track of everything in your head.
Understanding your cash flow and keeping track of your budget is what needs to be done to make sure you don’t make a mistake you can’t come back from. It’s a good thing to overestimate expenses and keep the outlook of revenue relatively low. When projections are off the margin of error will act as your safety net.
Morale is Declining
When a business is booming and your shop is busy round the clock, this means that your employees are running around from task to task. This means that your staff will take on more duties and work without initially getting a raise. Overworked employees who don’t feel compensated for their efforts always backfires by draining morale.
Rapid growth may sound like a welcoming thing, but you have to think of the human element to this. Before your employees feel drained and not rewarded for their work, be sure to have a plan for increasing compensation based on heightened business and revenue. If cash flow has become problematic due to growth, then it may be hard to offer up more pay early on. Until you’re able to offer more pay, ensure your employees are not overworked. Once cash flow is under control, be sure to offer bonuses or raises.
Customer Service Drops
When small businesses see an upshot in growth and a growth in their customer base, customer service can be the first thing that suffers. More customers with a team of employees that has expanded is a powerful combination that works against positive customer service. Employee burnout and fatigue are the culprits of this and have to be looked at before things get out of hand.
Small businesses should look into hiring more people to handle the growing customer base or figure out a way to take on less work. Hiring more people may sound like a good thing upfront, but make sure your cash flow is in check.
Leadership Isn’t Leading
When business is booming, it’s easy to focus solely the day-to-day responsibilities that were instilled from the beginning and not set aside time for future planning. Since your small business’s outlook is obviously headed toward aggressive expansion, it’s important to plan ahead with a long-term outlook.
Management should be able to delegate tasks to employees so they can take some of the daily stresses off and focus on setting down plans for the future. Trust your employees to work through the small daily details while you map out a long-term plan for your business. Management should have forward-looking meetings meant to outline next steps for a business in the quarters to come.
About Walker & Associates
If you’re in the market for a new insurance partner, do your homework to ensure a lucrative venture and positive relationship. Contact us online at Walker & Associates Insurance or by phone at (800) 213-7126 for your insurance needs. We can explain your coverage options and how much coverage will cost.