The Danger of Rapid Growth of Small Businesses

Growing small businesses too fast can be as dangerous as none. You feel that you are constantly operating in crisis mode, and suddenly you do not know every person in the team in detail. The company is the same, but circumstances have changed. And it is necessary to adapt to them. What are the dangers of rapid growth, and how to avoid them?

Office Life

Living with 50 colleagues is naturally different from five. People are fighting for space, technology and often the attention of superiors or owners. A larger team brings more considerable and hitherto unknown challenges. While five colleagues have worked almost without rules until then, this model cannot be maintained with a large group of people. Whatever you want and desire.

What Can Be Done To Prevent This From Happening?

Try to provide the most flexible work possible for all colleagues, but everything has its limits. Even if you keep thinking about the startup, where everyone comes to work as they please and plays billiards instead of a meeting, such a cycle in a larger team will sooner or later bring reduced productivity. Rules and processes are not a scarecrow for large corporations, but they can help in a small and reasonable way. And a medium-sized team desperately needs them.

Loss of Financial Overview

When a business is in its infancy, owners have an almost perfect overview of every penny. But once a company gets beyond a specific turnaround, it’s very challenging to keep all the numbers in mind. Misunderstandings of profit and cash flow are common, resulting in disaster. Especially with growth, a company can find itself where its monthly expenses are more significant than working capital. But if the company is not careful, it may be only one month from insolvency.

What Can Be Done To Prevent This From Happening?

The most important thing is to determine and monitor your budget and understand cash flow dynamics. Consultations with accountants are already needed more than just when filing tax returns. It is also essential to compare with similar companies in the region so that the owners understand the context of the decisions they usually make and have a financial impact. Companies should plan their growth according to expected sales and comprehensively follow precise financial analyses, including market, economic studies, and other available data.

Inefficient Organizational Structure

In direct proportion to how the company grows, the need to be organized also increases. Doing fast and in an accessible mode can be effective in the beginning when a team is full of enthusiastic people who want to create a business on a green field. As individuals change into groups with different goals, they need to be organized more to be productive. In addition, communication is no longer as accessible as it used to be in the micro-team. People don’t have all the information, and the owners don’t even want to share their every idea with everyone.

What Can Be Done To Prevent This From Happening?

Please pay attention to the expansion of the organizational structure and always be sure that it is the most efficient that the company needs at a given point. When creating teams, remember those common goals are equally clear to everyone and standard rules. Supporting departments must also grow hand in hand with the company’s growth, which will ensure that the people in the team have the necessary service and do not engage in non-rewarding activities. Cascading communication through individual leaders may not always work perfectly, so it must be constantly supported. In addition, it is appropriate to set up a structure for meetings with a specific group of people (equal levels, leaders, projects) for particular people to have the information they need and others not to deal with those they do not need.

Inefficient Selection of People

Every startup that thrives has determined and talented people who will bring success. However, it is more difficult to choose suitable people for a well-established train as the company grows. In addition, you are pressed for time to address the specific needs that growth has brought. Businesses can easily be persuaded and hire a less skilled person hoping that they will learn the missing knowledge, only to solve the problem quickly. While with a minor team, hiring a new team member could be the answer to the unique situation, with the company’s growth, this is not always the right strategy and is a recipe for a bloated organization with unclear responsibilities and competencies.

What Can Be Done To Prevent This From Happening?

Try to be proactive and not reactive and quickly cover the hole. Sometimes it pays to wait and choose a more personal candidate than he knows. He wants to learn faster than one who knows but does not want to develop. Relying only on the so-called contractors (temporary staff) may retaliate. They will take the critical know-how with them as soon as they leave, and you can start again. You need to create and maintain a crucial team of employees who understand the business and the process. Only accept a new person if the need is justified. Often the problem can be solved by other tools, automation, changing the division of labor in teams, etc. Already for 30 employees, the thinking in this regard must be different from five.

Bad Customer Service

As the business grows, so will the need for increased customer service. Many smaller companies benefit from the reputation of those willing to take an extra step concerning the customer and want to achieve excellent and personal service for the customer at all costs. With the company’s growth, there is no time for this in the first place, and it can take revenge. Negative customer feedback is often the first signal that a company grows fast.

What Can Be Done To Prevent This From Happening?

Make sure you pay the same attention to customer service hand in hand with growth. Have standards and clear rules for how to succeed. The team must be prepared not only for change itself but also for how it will support it.

Errors From The Management’s Point of View

As the company grows, so do its top executives. You need to take a step back and look at things from a broader spectrum from time to time. Too many small business owners forget about this as they grow and get involved in solving minor problems that do not add value and do not focus their attention on the company’s development. New leaders and managers are emerging who may not have the necessary skills and leadership skills.

What Can Be Done To Prevent This From Happening?

Business owners can no longer get involved in micro-management and can no longer know every single part of individual people’s work. On the other hand, they must not completely break away from the day-to-day business. Strategic decisions have already made a direct impact. Trust those who have been with you since the beginning to do their job without your attention. It is also important to realize that colleagues often perform some tasks better and more efficiently, and there is no need for one person to pay more attention to everything. Pay attention to the development of leadership skills of all managers. The most common reason for the departure of any employee is the direct superior.

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