Rapid growth may seem like a dream come true for entrepreneurs, but it hasled to the downfall of several businesses: Toyota, Groupon, and BlackBerry, just to name a few. Once highly successful companies, they all have suffered due to poorly managed rapid business growth. But you can learn from the mistakes of these companies. Here’s how to effectively cope with rapid growth in your business:
Make Customers Your First Priority
As Groupon expanded, its staff became notorious for poor customer service – thousands of unreturned customer emails, a “money back guarantee” that never delivered, and an overall flippant attitude toward its most loyal customers. As a business grows, it can be extremely difficult to provide good customer service. Make sure that you have enough competent staff and resources to address customer needs and concerns as they arise. If something goes wrong, take responsibility—customers will view your business as transparent and honest.
Balance the Old with the New
While it’s tempting to put most of your focus toward expanding, make sure you’re giving equal attention to your existing structure. Toyota’s aggressive expansion from 2002-2010 eventually led to a noticeable deterioration in the quality of their vehicles. Set up a viable system that includes a strategy to implement the staff, programs, and resources needed for maintenance and quality assurance.
Plan for the Future
A study by Columbia University found that business owners who were able to “envision their business as a larger entity” coped best with rapid growth. In order to adequately plan for the future, set small goals that can be accomplished each quarter. And remember: it can take up to a year for employees to be sufficiently trained in their positions. If you foresee needing a lot of additional personnel in a year, plan to start recruitment and hiring now.
Keep Your Finances in Order
Unless you’re a financial expert, dealing with the finances of a rapidly growing business is challenge. What once required a few simple calculations now requires a careful analysis of capital, investment, profit, and interest. Keep a detailed budget of your finances. Don’t assume that a lot of money coming in equals profit—you have to consider the overhead, which is likely much more expensive now, and taxes. At this stage, many entrepreneurs consider bank loanto help sustain them through this period. Bank loans (like the 4.9% you can get from Clydesdale) can be a lucrative option if you’re financially struggling to provide quality services to an exponentially growing customer base. But again, tread carefully—it is a smart idea to meet with a financial expert, who can sit down with you and explore your options.
Rapid growth needn’t be the demise of your business. There are several companies who, using the guidelines listed above, were able to successfully navigate through their period of rapid growth and later go on to become extremely successful—Google, Starbucks, Apple, Intuit, PepsiCo, Amazon, and many others.