The Five Traps of Business Growth (and how to avoid them)
There’s a lot of hype around the term business growth. An emphasis on scaling your business. But the relentless pursuit of growth can be damaging to the health of your business. Many fantastic companies no longer exist because of how the founders grew them. And there’s plenty of lessons to be learned for business owners wanting to build healthy, sustainable organisations.
#1 Growing too fast
To the click bait and acknowledgement hungry masses, this may seem counter intuitive. But growing a business too fast is a sure fire way of putting it’s health at risk. If it feels like your business is out of control, it probably is. And it’s perfectly reasonable to slow that growth down and take stock.
There’s many reasons why fast growth might not benefit your business.
If you have people knocking down your door to work with you, that might be because you’re damn good at what you’re doing (go you!). But it could also be because you’re underpricing yourself. And income that’s not enough to match your business model is dangerous. Because if the price tag isn’t high enough, it doesn’t matter how many hours/products/things you sell. You’ll never climb out of the muck if you’re not charging enough for your offer. Simple, yes? Hard to hear? Also yes.
Growing too fast without a plan is never a great idea. And slowing down, assessing where you’re at and putting the right things in place (i.e. having a plan) is always a good idea.
#2 The Wrong Customers
Another potential trap in the pursuit of business growth is attracting the wrong customers. When we’re busy being busy, we tend to take less care with our decisions, and before you know it? There’s so many of the wrong customers lurking in your business that you can’t help but notice.
The wrong customers are the ones who:
Need to be convinced about your offer
Negotiate on price beyond the norms of business discussions
Convince you to change the way you deliver your service/product to suit them
Complain about your service/offer/price even when you’re delivering on point
Refer other customers to your business with similar traits/expectations
It’s up to you to decide which customers you want to work with. People will treat you and your business the way that you let them. If you’re not attracting the ideal client to your business, then it’s time to look at what you’re doing that could be tweaked. Getting your branding, messaging, communications and sales processes reviewed would be a good place to start. You need to be obvious about who you want to work with and on what. We’re all too decision fatigued to read between the lines, and confusing messaging won’t help you.
#3 Cash Flow
This old chestnut.
Contrary to what most people assume, businesses that are growing are hungry for cash. So the faster your business is growing, the more cash you’ll need to fund it. For the majority of business models, you need cash to fund growth, and cash flow problems always come up at the worst possible time.
Think about it. You don’t usually get paid until you’ve delivered your service/product/thing. But your costs (wages, product, rent, stuff) usually need to be paid for a few months before the money you earn from your thing flows into your business. So even on a simple level, you can start to get the gist of why business growth needs cash.
If you know that growth is coming, you can plan for it. Making sure that cash is available to fund your growth when you need it is essential to making your business sustainable. A cash flow forecast is vital for any business owner trying to grow and improve. (Hint, hint, we can create one for you).
#4 The Wrong People
Businesses are collections of human beings. So your business health is directly linked to the quality of the people you choose to work with. Your team, your advisors and your suppliers.
When we’re busy being busy, we tend to rush our decisions. And it can be so tempting to think that hiring people will be the solution to your busy-ness.
But getting the right people is a feat to pull off.
It’s no suprise that larger businesses spend lots of time, money and effort branding themselves as employers. It works. Finding great talent requires effort and planning. Usually long before you actually need to hire. It’s important to plan for the skill shortages that will open in your business over time, and have a strategy for attracting the right people.
Once you have a team, you need to delegate. The most overused and misunderstood word in management speak. It’s HARD to delegate, and most of us need to learn how to do it well.
People? Awesome. Also, hard work. We all are. Humans are complex beings, so bringing new humans into your team should be given the respect, effort and thought it deserves.
#5 Too Much Complication
Complicating things is very easy to do. I can put my hand up and say that I have often over complicated my business, and it hasn’t been helpful.
It can be really tempting to offer all-the-things. But what that usually does is steer people away. The ones who you want to be interacting with on this-other-thing.
Complicated businesses aren’t generally very profitable.
Having too many products, services, different price points, complex sales funnels, or tricky onboarding processes? Nope. They just don’t work.
The businesses that have a clear solution to a problem that their audience is looking for, at a simple, understandable price point? They’re the businesses that run well and generate profits.
Narrowing your product range can be any easy way to increase profits. Honing in on your ideal customer, which services they most benefit from, and pushing those services? Simple. Effective.
I get it. It’s hard to uncomplicate things. There’s pride in having a large product range or being able to help anyone-anywhere. But being everything to everyone also makes you ideal for noone.
Is there something you could uncomplicate in your business? Do it. You have the power to shape your business, and it’s up to you to craft it into the business you want it to be.
Work With Me: I work with business newbies, founders getting serious about their businesses and established businesses who need a CFO without the full time salary. I can help untangle your business and create a plan for your success.
I’m ready when you are.