You may be downright artistic when it comes to pinching pennies to help support your brand new business, and your business is small enough to turn on a dime to meet changing customer needs. But, are you prepared for business growth?
Unexpected early success is a nice problem to have — as long as you have planned for it. If you prepare for growth before it happens, you can actually enjoy your successes while continuing to take them to the next level throughout your company’s lifecycle.
Recognize and Address the Common Pitfalls Before You Grow
Dreaming about future success is a fun exercise, and it’s the first step in planning for growth. When you anticipate how success might affect your daily operations, you can decide how you will address the pitfalls so you can avoid them, or at least sail through them smoothly.
Here are some of the common pitfalls that you can address with proper planning.
New Business Creates New Expenses
It’s almost guaranteed that your ability to support an increasing customer base will wane at some point if you don’t make some adjustments. Face it: you can’t do more and more with the same old stuff. If you manufacture products with equipment that produces 10 units per day, you’ll have to think about acquiring faster equipment if you want to sell 100 units per day.
Service businesses cannot escape these issues, either. Eventually you will need better computers or more of them, along with office supplies and even a better phone system to let you collaborate with customers more efficiently.
You have to spend money to make money. But, with proper planning, you can control expenses. With your eyes open, you might be able to buy slightly-used equipment, or even rent your way to success.
Hiring Gets Out Of Control
More customers require more people on your team to support them, ranging from the staff that is responsible for producing products or services to the customer-facing employees who answer questions and generally keep them happy. Considering the significant expenses behind permanent, full-time staffing, however, you need to be prepared with other alternatives before you need more hands.
In the early stages of growth, you may not be sure if you need more full-time, permanent employees immediately, so don’t forget that you have two hiring options: permanent employees or contractors (and other temporary staffing). Research your options before you need more help, and you’ll be well-prepared to act quickly when the time comes.
Work Flow Runs Amuck
Small businesses have an advantage over their larger counterparts: flexibility. When customer needs change suddenly, the little guys are positioned to change direction in a heartbeat. This is fine when you have a small customer base, but do you want to keep that base small forever?
Even when your business is small, it doesn’t hurt to introduce a little sanity into your work flow. In fact this is a great time to start developing processes for the things you do every day. Learn how to control how work gets from Employee A to Employee B — and how to keep track of the work every step of the way. A good project management system certainly helps keep everyone informed and organized. Check out our comparison of Trello vs. Asana to start examining possible systems that might work for you.
Tax Time Presents Unwelcome Surprises
We all hope that tax time will become simpler in the near future, but unfamiliarity with a changed tax system can create as many surprises as an overly-complex system. The bottom line is that taxes play a role in how well you handle growth. Just one example involves major equipment purchases. You might expect tax write-offs from the purchase of high-priced machinery to offset some of the unexpected profits realized from a growth spurt. But, if the equipment represents a depreciable asset rather than an expense for tax purposes, you may need to depreciate it over a multi-year time frame.
Particularly in a time of growth, it’s more important than ever to prepare in advance to avoid the discovery that you owe way more than expected when your taxes are prepared. If it’s already too late for this year, then learn a lesson — and talk to your accountant or another trusted financial advisor to find ways to better control cash flow before unaffordable surprises appear in the future.
The Business Takes a Toll on Your Personal Life
Particularly when you’re the sole owner of a business, you tend to put life on hold while you dedicate every waking minute toward getting it in good shape. Unfortunately, good shape is a moving target; growing a stable business generally requires the same time and attention that you spent when getting started.
You cannot live solely for your business. It’s not healthy for you or your company. To make business ownership worthwhile, you need time with your family and friends — and sleep. Learn to delegate, possibly to a second-in-command. Then schedule some time off, and honor that schedule as you would honor a scheduled meeting with your most valued customer.
The Solution: Forethought and Planning
Of course, the above pitfalls are just a partial list. All small business owners need to remain alert to the potential downsides of growth within their particular industry and circumstances.
Fixes to all possible pitfalls have one thing in common: the need for forethought and planning. Keep your crystal ball close at hand so you are aware of future possibilities, and you can be prepared to grow your business into a major conglomerate. The sky’s the limit if that’s where you want to be.