When most new entrepreneurs get involved in a startup for the first time, there’s one thing on their minds: growth.
They want to enter a market up as quickly as possible, and start earning the rewards of leading a multimillion dollar organisation.
Of course, the benefits seem obvious, they’ve been up in our current entrepreneurial culture. The headlines are full of stories of tiny operations that turned into something massive, seemingly overnight, and stories of tech companies that built themselves models that reap millions of dollar in profit.
Growth is exciting, but there are actually dangers in growing too quickly.
We’ve listed 3 of them below:
1. Operations, Production and Cash Flow would be affected
Your business, when it serves 10 customers a week, will not be the same as your business when it serves 1,000 customers a week. The effects of scaling up will demand significant changes to your organizational structure, in ways you might not be able to predict. For example, you might need new niche roles in human resources that you didn’t need before, such as assistants or coordinators to serve your main staff.
Your physical equipment might not be able to keep up with the new production capacity, or your previously profitable operations might end up barely breaking even thanks to inefficiencies you never noticed at a small scale.
2. You’ll be focusing on sales
Another problem businesses have in scaling too quickly is focusing exclusively on sales. When the end goal is general growth, you tend to think only in terms of incoming customers and incoming revenue.
This isn’t inherently bad, and often leads you to your goals, but the drawback is you never get a chance to focus on your infrastructure, or your operations, or any other process that also need room to grow. A slower pace gives you the opportunity to focus on these areas.
3. Reduction of customer service
When you start out as a small business, every customer will be precious to you. This inherently takes your customer service to a higher level of quality. Sometimes, not always, expansion can ruin this.
Your customer service team will be managing more customers all at once, you’ll have fewer (and newer) staff members, and you’ll be forced to adopt formulaic and systematic customer service procedures that may come off as alienating to your previously loyal customer base. It can cause major ripples for your business.
Growth is exciting. It has massive potential to earn you more money and push your limits as a leader. But that doesn’t mean you should chase after it as your only goal, or sacrifice the quality of your business in order to attain it. You’re far better off remaining patient or even idling for a few years as you start developing the foundation for your enterprise.
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