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Potential Pitfalls of Fast Business Growth

Pitfalls of business growth

Pitfalls of business growth

Success can test a business as surely as failure, though in very different ways.

Since the tech boom of the eighties fast growth has been an ideal for businesses. However, if not carefully managed, fast business growth can have a debilitating effect on staff morale, customer relations, and finance.

Businesses posting annual growth rates between 30 and 150 per cent are deemed to be fast growing. Typically they all, to varying degrees, exhibit one or more of the following issues:

  1. Managerial burnout. Business expansion creates an increase in managerial responsibility. Sometimes businesses grow in directions outside the manager’s expertise. While at other times the sheer amount of business growth makes adequate managerial oversight all but impossible. Either way, managers risk burnout, with the business itself suffering as a consequence.
  2. Customer relations: Business growth means new customers. Redundant business processes are often ill-equipped to deal with larger volumes of orders and invoicing. Failures in either of these areas will reverse business growth and do long-term damage to the brand.
  3. Financing: Business growth depends on investment. Many fast growing businesses have lamented the fact that the speed of their growth has outstripped the financial controls necessary to the comfort of stakeholders. The perception of a business’ loss of financial control is often enough for shareholders to get cold feet, sell their stock, and thereby hamstring the company.

 

There are no hard and fast rules when it comes to judging the impacts of business growth. Business experts recommend managers be aware of what is happening, trust their gut, and get help early – before their business becomes a victim of its own success.