4 Signs Your Business is Growing Too Quickly
For a company to succeed, it needs to grow. Staying the same year after year isn’t remaining static, it’s stagnating. While some companies err on the side of too-slow or no growth, other companies make the mistake of growing too quickly, ultimately burning out and, in the worst cases, fading away. If a company is growing too quickly for its own good, there are usually some easy-to-spot signs, often concerning the company’s finances, employees, and customer satisfaction.
You’re Spread Too Thin
One clear sign that your company is growing at too fast of a clip is if you feel you are spread too thin. When a company first starts, it’s not uncommon for an owner to wear many hats – CEO, CFO, and CTO – all rolled into one, for example. But, as a company gets bigger, each of those roles also gets bigger. You might find yourself attempting to perform the roles of multiple full-time positions, when you might barely have time for the responsibilities of a single position. When there’s too much too do and too little time to do it, it’s not uncommon for an owner to cut corners, opening the door to mistakes and issues down the line.
Several financial concerns can crop up when a business is growing too fast for its own good. One common issue companies face is being strapped for cash. As your business expands, so do its financial obligations. When growth is at a planned for, measured pace, your company is able to find financing to help it keep up with the increase in expenses. If growth is too quick, your expenses might shoot past your available credit or cash, creating a financial crunch.
Another financial issue that is common in cases of rapid growth is a bump in the amount of receivables. Your company might have increased sales, but if a lot of those sales are made on credit, and the individuals or companies you sell to are slow to pay up, you’re likely to run into a financial wall sooner, rather than later.
Underestimating the role finances play in the health of a business is another issue that typically affects rapidly growing companies. Without a dedicated CFO or an outsourced, virtual chief financial officer, it can be difficult to really grasp what your company’s financial health looks like and difficult to put a plan into place that gives you the capital you need to grow at a sustainable rate.
Companies that are growing too quickly often make the mistake of hiring just to fill empty positions, without paying much attention to the quality of those hires. If there’s a lot of pressure to put people into certain roles, there’s also usually pressure not to vet those employees as closely as you should, leading to a potential mis-hire.
Another clear sign of too-quick growth can be seen in a change in the way your team views your company. If employees who were formerly excited by the idea of working for your business become less engaged or start jumping ship, it can be due to rapid or constant changes in your business. While most people want to be on a train that is moving forward, being part of something that changes on a seemingly daily basis or working for a company where the future seems uncertain can make people who were once thrilled to be a member of your team start to reconsider their role with your company.
Having customers come back for more is key to the success of any business. But, sometimes, companies get so wrapped up in growth that they ignore the customers they’ve already won over, in favor of new, uncommitted customers. If previously loyal customers stop ordering from or working with your company, that can be a sign that you’ve tried to grow to quickly and have alienated your core client base.
The team at New Direction Capital understands that growth is essential for any business. To learn more about how we can help you chart a path for healthy, steady growth, get in touch with us today.
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