The growth phase of a small business is a very delicate time. Small business owners need to manage their growth very carefully to survive and thrive during that time. They need to avoid some common pitfalls.

If your startup business is lucky enough to be successful and reach the all-important growth phase, it is important to look at the missteps other business owners have faced and how they overcome the challenges. Here are four common mistakes business owners often make during the growth phase of their existence.

#1. Focusing Entirely on Growth

It is easy to get caught up on the growth of the business, but doing so is a big mistake. You want your business to grow and thrive, but you do not want to lose sight of the products and services that helped you get this far.

Many business owners are tempted to grow too fast too soon – introducing new products and services without fully understanding the implications on the core business and their existing customers. Growth is great, but it should not come at the expense of customer service or core competencies.

#2. Treating Financing as an Afterthought

Many new startups begin on a shoestring budget. Their owners may finance them out of personal savings, credit cards or other creative forms of financing. As a result, they never develop a strong banking relationship or learn to line up financing. They end up in a bind when they enter their rapid growth phase.

Businesses that are growing rapidly often need more, not less, capital to continue their operations. If you need to finance the raw materials to fulfill a big order to smooth out the unevenness of your cash flow, you will need a solid source of flexible financing. Treating financing as a mere afterthought is always a mistake, but it can be a deadly blunder as your business enters the all-important growth phase.

#3. Hiring Too Much – or Too Little

Hiring is another danger zone for businesses that are growing rapidly. Many entrepreneurs are used to doing virtually everything on their own, from ordering the raw materials to making the sales calls. As the business moves from startup to rapid growth, that approach is no longer viable, and that means the firm needs to scale up fast.

Doing too much hiring can have a harmful effect on future growth, sapping needed capital and introducing a new level of management complexity. Hiring too few people can also be bad for growth, especially if additional workers are needed to fill orders and answer customer inquiries. Striking the right balance is essential during the growth phase of the business. Failing to get it right can be very dangerous. Hiring the right people is always important, but building a solid team is even more essential for businesses entering their growth phase.

#4. Letting Inventory Levels Get Out of Control

It is easy for businesses to run short of raw materials and finished products during a period of rapid growth, but allowing inventory levels to grow out of control is just as dangerous. Allowing inventory to grow too much can sap your precious capital and compromise future profits.  Business owners should strive for the proper balance as they manage the growth of their operations.

Finding a flexible source of financing can help business owners manage their inventory levels and make sure there are sufficient finished products on hand. The ability to borrow as needed without incurring unnecessary costs is a great way to avoid inventory excesses without risking running out of finished products.

Managing the growth phase of your business will always be somewhat of a balancing act. Successful growth means meeting the needs of your existing customers while bringing new ones onboard, introducing new products without losing sight of the existing product line and hiring the right team to take your business to the next level. How you handle this critical phase of your business will play a big role in your future, and avoiding common pitfalls can help you succeed where others have failed.

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