Mistakes Small Businesses Make While Trying To Grow
BY: EMILY SNELL ON WEDNESDAY, MAY 01, 2019
Everyone intuitively understands that businesses can fail in a bad economy. It is less obvious that many businesses fail because of explosive growth. Fortunately, this type of business failure can be avoided with careful planning and execution. Below are a few issues to be mindful of as you manage your growing business.
As your business grows, you will need to hire others to help you run your business. Hiring the wrong employee, however, can be expensive. Not only will the person be unable to perform the job, but you will also have paid the person’s salary and invested time training the person before you realize the person is a wrong fit.
One alternative to avoiding this mistake is to hire a contract worker instead of an employee. This option is especially suitable if you are looking for a skilled worker for a finite project. You can learn about hiring contract workers here.
Sometimes, you will have to hire a permanent employee. To better your chances of a successful hire, be sure to have a detailed job description, vet the potential employee by asking appropriate questions, carefully train the employee and give thorough feedback as the employee learns the job. To compete with larger businesses for talented employees, consider alternate ways of recruiting and other places to look.
Lastly, if you have made the wrong hire, do not hesitate to let the person go. The wrong person at the wrong job not only disrupts work, but the person can affect the morale of your other employees. Though firing a person is a difficult thing to do, it is necessary if you expect to run a successful business.
Bad Financial Management
As your business grows and you begin to see an influx of cash, it is tempting to spend all the money to pay yourself or to grow your business. This, however, would be a mistake. Most businesses have cycles of boom or bust, so you must manage your money during the boom in order survive the bust. Continue to watch your overhead. Keep your personal and business finances separate. Pay yourself regularly but keep the draw reasonable. Incorporate. These two articles give additional money management advice for a small business.
As your business grows and you begin to hire, you become the natural leader of your employees. They will look to you to set a direction for your business, communicate and assign tasks for their individual jobs, communicate your business goals and inspire them to achieve these goals. Some of these leadership skills will come naturally to you—for instance, you started your business so you should have a clear vision for your business. You might find other leadership skills difficult. For example, you might be an introvert but, as the business owner, you might have to address a large gathering of your employees. Fortunately, if you invest the time and effort, you can learn these leadership skills.
In a small business, one person typically holds many responsibilities that, in a larger business, are handled by different people or even different teams. As your business grows, this separation of responsibilities is necessary to process the large volume of work.
If this structure is imposed onto your business too late or haphazardly, issues can occur that can cause a business to collapse. Different departments might contradict each other in their internal messaging or external deal-making. The quality of your goods or services might fall and drive away your customers. Therefore, you must control your business’s growth well enough so that internal teams have time to learn to work with each other and so that the quality of your goods and services can remain the same. Here are some ideas on how to structure your business for flexible growth.
Every business person wants to grow his business to some degree. While this expansion stage can be tricky, fortunately, most of the biggest mistakes are well-known issues that can be avoided. As you grow your business, pay attention to some of the issues mentioned above so that, if you do experience explosive growth, they do not destroy your business.