It sounds crazy but for startups rapid growth can be just as dangerous and fraught with challenges as having no growth at all.
Being ‘hyper gazelle’ and growing too quickly can put pressures on many areas of your business, stretch your resources and put you in risky territory.
And while we all want our businesses to achieve measured and sustainable growth, when growth surpasses expectation it can bring a number of problems.
1. Reduced cash flow and declining profits
Not all growth is profitable. It’s business 101, but as you grow the demand for cash flow is at its highest. This happens for many reasons. More staffing is needed to keep up with demand, more cash is needed to pay for stock, and supplier and delivery costs can balloon out. When this happens you’ll see a decline in cash available to withdraw as funds are reinvested in increased cost of goods.
2. Teamwork and team harmony takes a hit
Team dynamics change when you experience rapid growth. The influx of new team members to help you keep pace with your growth, comes at the cost of the close knit working relationships you established in the early days of your startup, when numbers were small and everyone participated in various areas of the business.
The introduction of new team members at this stage can impact the existing harmony. As new staff members assimilate into the team, their induction, training and the new ideas they bring can be a source of stress to the existing team.
Additional pressure is placed on each staff member as well as the team as a whole. And as roles change and people become more focused on specific areas of the business, rather than participating in multiple areas, people can go through a kind of grieving process.
They go from being a member of a small tight knit team with open access to their leader, to being part of a larger group in a new hierarchy with less one-on-one time with their leader. To some, it can almost feel like a step backwards.
If not managed effectively, this can be a period of low morale and potential conflict between members of a once cohesive and collaborative team.
3. Customer service levels dip
Quite likely your rapid business growth is a result of excellent customer service, however, if you can’t maintain this high level, it represents a significant risk and threat to the business.
As business growth and activity ramps up so does customer demand. So while you’re busy hiring and training up new staff members and implementing new systems to facilitate your growth, there is a real risk that customer service levels will slip.
Part of this can also be attributed to staff members trying to keep up and as a result cutting corners or new staff members reverting to practices from their previous employers, due to a lack of training and time to deliver adequate training.
What can be done?
While we all want our businesses to be successful, pursuing a strategy of growth at all costs without understanding the challenges you’ll face will only hurt your business in the long run.
If you do find yourself in a situation where your business experiences rapid growth, you’ll need to manage all of the above while also adjusting your own expectations. For instance, if flexibility was the main reason you started your business so you could choose your own hours or work around family commitments, then it’s likely that some of these benefits will be lost.
The best thing you can do is put in place careful growth management strategies to ensure your business remains sustainable and stays true to your original vision and purpose. Otherwise, you’ll find yourself in continual crisis mode which slows down your progress and diverts your attention from the role you loved.
Deb Farnworth-Wood is a serial entrepreneur, author and the founder of the world-leading medi-aesthetic franchise, Australian Skin Clinics. Born in Kenya and raised in the UK, Deb moved to the other side of the world to retire, only to build a $70 million business.