So you have decided to expand your business. You may already be thinking about best practices for avoiding common pitfalls when scaling. But that does not mean your business will be immune to challenges.
The best strategy for growing businesses is to be aware of common problems so that you can prevent them or correct them quickly.
Here are seven of the most common growth problems that small businesses face and the best ways to prevent and solve them.
7 challenges for growing companies
1. Your earliest employees are dissatisfied.
The problem: While it sounds good in theory to work for a growing company, some of your earliest employees may be starting to show signs of being dissatisfied. Why do things have to change? Why can we not all sit at the same meeting table anymore? Why can I not chat with the CEO when I need to?
How to avoid it: If your longest-serving employees are dissatisfied, your team culture has probably changed and they want things to stay the same. This is hard to avoid completely, but there are some things to keep in mind.
Find out what’s important to your team culture – although this will change over time, there will be some aspects you will want to protect as you grow. Also, make an effort to maintain the same levels of transparency and communication that you have always had.
Here’s how to fix it: Increase your company’s transparency and communication with employees as you grow. But also realize that not all employees are right for every step of your business journey. Some people prefer small start-up teams, others prefer business and corporate environments. Do what you can, but understand if it’s time for some early employees to move on.
2. You have grown out of your tools.
The problem: The tools you chose when your business was just starting are no longer cutting. You’re having problems with your apps and maximizing plan limits, and you know you’ll need to make some changes.
How to avoid it: Take a good look at your tech stack before you deliberately scale up your business. Will your key tools (including your CRM, email marketing provider, and accounting software) offer what you need as you grow? Do you want to be able to upgrade your plan, or switch the only option to another provider? Save time and money in the long run by making these decisions early.
Here’s how to fix it: Take the time to look at your tools and check what needs to be changed, added or added. We’ve put together our recommendations for the best SaaS tools to get you started.
3. You have hired too fast.
The problem: With the budget in the bank, you have done what many growing companies do: increase your team size. But a few months later, you might think you hired too fast. Your cash flow may be in trouble, productivity may decline while new employees are being trained, or your team culture may suffer.
How to avoid it: Hiring too fast is one of the biggest business expansion issues – and it’s one you really want to avoid instead of solving. Do not expand your team more than is really necessary, and validate each addition to the team.
Remember to learn from the mistakes of other startups and avoid overly aggressive growth choices and risk appetites. You can also follow our guide to successful scaling of your small business.
Here’s how to fix it: If you have hired too fast and you need to make some tough decisions, do not delay in making them, but do so with heart and empathy. Be transparent about what went wrong.
Buffer opened up about the most difficult decision so far for his business: to take 10 layoffs and say goodbye to 11% of the team after it started burning money instead of being cash flow positive.
Buffer attributed this mistake to over-aggressive growth choices and to move into a house it could not afford, said CEO Joel Gascoigne:
“We thought we were paying attention to balancing the pace of our employment with our revenue growth. We were not. One of our advisers gave us an appropriate metaphor for what happened: We moved into a house we did not have. afford with our monthly salary. “
In addition to making 10 difficult layoffs, Buffer got his cash flow back in the green by cutting founders’ salaries by 40%, interrupting two employee benefits, reducing the sponsorship budget and canceling a team retreat. It peeled off the patch quickly and is very conscious of avoiding similar mistakes.
4. Budget is doubled, but not your results.
The problem: We have doubled the team, why have we not doubled the results? We have multiplied our expenses, why do we not have more customers? Whether you or your investors are asking these questions, it can be difficult to find answers.
How to avoid it: Scale slowly. Make gradual improvements and investments, and keep your finger on the pulse of your company’s key financial metrics.
If you follow a slower growth philosophy and maintain fast teams, your business can become more productive than making large hiring rounds that disrupt your team’s flow and require time-consuming onboarding.
Here’s how to fix it: Slow down and see what has gone wrong. Has productivity fallen? Are you burning too much money? Have you hired the wrong people? Or were you just too optimistic?
Become aware of what the real problem is and decide how best to turn your growth strategy around.
5. You spend too much time on coordination instead of actual work.
The problem: Hiring people should free up your time, right? Eventually, yes … but usually not in the beginning. Boarding new employees is one of the most time consuming tasks for any company.
How to avoid it: This is another business growth problem that is best avoided by growing cautiously. By hiring more gradually, you and your team get more time and energy to get on board new team members.
Here’s how to fix it: If you or your company’s management team spends every minute managing people instead of focusing on your “real work”, look at your processes.
Identify where the inefficiency is and understand what needs to change in your strategy, management team and business tools. What are you wasting time on?
In an interview with First Round Review, Bob Sutton, an expert in organizational behavior at Stanford’s School of Engineering, shares that scaling is often about less, not more:
“Scaling is actually a problem with less … There are lots of things that used to work that no longer work, so you have to get rid of them. There are probably a lot of things you’ve always done that slowed you down without you realizing it. ”
Departments become less adjusted.
The problem: You once sat together around a table, but now your team has grown. Your sales team has their own meetings while marketers talk to each other. And data silos are starting to put in.
How to avoid it: Scaling a business successfully requires excellent communication and collaboration. Let your departments work closely together, maintain individual responsibility for overall business goals instead of just department numbers, and make sure you sync your tools transparently.
Here’s how to fix it: No surprises here; you solve unadjusted teams by increasing customization. This means more face-to-face time, technological collaborative tools and interdisciplinary projects. Also, make sure that your data is synchronized to repair silos.
7. Contact management gets messy.
The problem: As your business uses more apps than ever before, the number of contacts in your database multiplies rapidly. And they are not even close to being organized.
How to avoid it: The most effective way to prevent and repair cluttered contact management is with a two-way data synchronization tool. By configuring it, you can quickly align contacts across all the right apps, with exactly the right data and segmentation synchronized between tools.
Here’s how to fix it: It is never too late to introduce two-way synchronization and restore order to the contact management. You can also use this as an opportunity to clear a contact and get a clearer picture of your leads and customers.