Growth is tricky. Whether you’re selling designer soaps or coding the next big social network, it’s tough to know when to push your company to the next level. One recent study found that 70 percent of technology startups scaled prematurely – helping to explain the overall 90 percent failure rate. What can you do to ensure growth takes place at a pace that doesn’t sink your company before it ever has a chance to succeed? Start by following these four guidelines and strategies.
Meeting Customer Demand and Expectations
One of the primary challenges with a fast-growing business is simply producing enough product or scaling a service rapidly enough to meet customer demand. This is a common problem with crowdfunding success stories or those rare, overnight marketing sensations: Customers line up by the thousands to pre-order product, then wait for weeks or months for delivery. This robs the company of its marketing momentum, and can severely damage customer goodwill. Before ramping up marketing, make sure your production can handle a potential influx of orders.
Making Recruitment a Priority
When growth is on the horizon, scaling the human resources of your organization is one of the most critical steps you can take – but it’s also one of the most challenging and time consuming. Adding personnel quickly can often lead to hasty hires of less qualified employees in order to have a “warm body” filling a seat on campus, a problem which can hamper growth, not aid it. Filling a seat is not the same as filling an actual need. Don’t get lured into the trap of hiring with an itchy trigger finger. During any growth phase, give new hires the same due diligence you would during periods of slower growth. Make use of contractors, temporary employees, and trial employment periods to help hedge your bets if you aren’t 100 percent certain about a hire – especially if they’re filling a non-critical role in the company.
Planning for a Cash Crunch
Growth costs money, and lots of it. It’s crucial to work with investors and lenders well before the growth phase hits so you can line up lines of credit or other emergency funds in order to meet payroll and fund production before cash is actually coming in. Once your bank account is running on vapors, it’ll be too late to line up contingent financing. Rapid growth also often leads companies to spend on items like meals, office equipment, supplies, and tech contracts without thinking these expenses through. Stick to your budgets and compare vendors whenever possible. In situations where you require an RFP from a vendor but are in a hurry, try requesting a quick turnaround. Proposals generated in the short term are likely to be just as competitive as those that take much longer to produce
Setting Up a Tech Infrastructure That Supports Growth
Companies managing a complex in-house technology infrastructure or providing a web-based service are likely to stumble. Don’t attempt to add servers on a piecemeal basis when growth is happening quickly. Outsource the operation to a company that knows what it’s doing and which makes managed services its business. Most cloud-based services are built to scale, so you needn’t worry about capacity or bandwidth issues when your company is growing, letting you concentrate on getting your product out the door and into the hands of your customers.