So you’ve made the decision to grow your business. You may already be thinking about best practices to avoid common scaling pitfalls. However, this doesn’t mean your business will be immune to challenges.
The best strategy for growing businesses is to be aware of common problems so you can prevent them or fix them quickly.
Here are seven of the most common small business growth problems and the best ways to prevent and solve them.
7 challenges for growing companies
1. Your first employees are unhappy.
The problem: While working for a growing company sounds good in theory, some of your early hires may be showing signs of being unhappy. Why do things have to change? Why can’t we all sit at the same conference table anymore? Why can’t I chat with the CEO anytime?
How To Avoid It: If your long-time employees are dissatisfied, your team culture has probably changed and they want things to stay the same. This is hard to avoid, but there are a few things to keep in mind.
Find out what is important to your team culture – although that will change over time, there are some aspects that you will want to protect as you grow. Also, make an effort to maintain the same level of transparency and communication as always.
How to fix it: Increase your company’s transparency and communication with employees as you grow. But also keep in mind that not every employee is suitable for every stage of your company’s journey. Some people prefer small startup teams, others prefer corporate and corporate environments. Do what you can, but understand when the time comes for some early employees to move on.
2. You have outgrown your tools.
The problem: The tools you chose when you started your business are no longer enough. You’re having issues with your apps, you’re reaching the plan limits, and you know you need to make some changes.
How To Avoid It: Before you intentionally grow your business, take a close look at your tech stack. Will your core tools (including CRM, email marketing providers, and accounting software) provide what you need to grow? Can you upgrade your plan or is the only option to switch to a different provider? Save time and money in the long run by making these decisions early on.
How to fix it: Take the time to look at your tools and see what needs to be removed, changed, or added. We’ve put together our recommendations of the best SaaS tools to get you started.
3. You hired too quickly.
The problem: With the budget in the bank, you’ve done what many growing companies are doing: growing your team. But a few months later, you might think you hired too quickly. Your cash flow could run into trouble, productivity dwindled as new hires are trained, or your team culture could suffer.
How To Avoid It: Hiring too quickly is one of the biggest problems in business expansion – and it’s one that you really want to avoid rather than fix. Do not enlarge your team more than is really necessary and acknowledge each addition to the team.
Remember to learn from the mistakes of other startups and avoid overly aggressive growth decisions and risk taking. You can also follow our guide to successfully scaling your small business.
How to fix it: If you’ve hired too quickly and are faced with difficult decisions, don’t hesitate to make them, do them with your heart and empathy. Be transparent about what went wrong.
Buffer talked about the toughest decision his business made yet: getting 10 layoffs and saying goodbye to 11% of the team after starting to burn money instead of being cash flow positive.
Buffer attributed this error to overly aggressive growth decisions and Moving to a house that couldn’t afford it, said CEO Joel Gascoigne:
“We thought we’d take care to balance the pace of our hiring with our sales growth. That was not the case. One of our consultants gave us an apt metaphor for what happened: We moved into a house that we couldn’t afford with our monthly paycheck. “
In addition to making 10 difficult layoffs, Buffer got his cash flow back in the green by cutting founders’ salaries by 40%, discontinuing two employee perks, slashing sponsorship budget, and canceling a team retreat. It tore the patch off quickly and is very conscious of avoiding similar mistakes.
4. The budget has doubled, but your results haven’t.
The problem: We doubled the team, why didn’t we double the results? We’ve multiplied our expenses, why don’t we have more customers? Whether you or your investors are asking these questions, answers can be difficult.
How To Avoid It: Scale slowly. Make incremental improvements and investments while keeping an eye on your company’s key financial metrics.
Following a slower growth philosophy and maintaining flexible teams can keep your business more productive than doing large hiring rounds that disrupt the flow of your team and require time-consuming onboarding.
How to fix it: Slow down and see what went wrong. Has productivity decreased? Are you burning way too much money? Did you hire the wrong people? Or were you just too optimistic?
Understand what the real problem is and decide how best to align your growth strategy.
5. You spend too much time coordinating instead of doing actual work.
The problem: Hiring people should free up your time, right? Eventually, yes … but usually not first. Onboarding new employees is one of the most time consuming tasks for any business.
How To Avoid It: This is another business growth problem that is best avoided by growing cautiously. The gradual hiring gives you and your team more time and energy to onboard new team members.
How to fix it: If you or your company’s management team is spending every minute managing people instead of focusing on your “real work”, take a look at your processes.
Identify the inefficiencies and understand what needs to change in your strategy, leadership team, and business tools. What are you wasting your time on?
In an interview with First Round Review, Bob Sutton, an organizational behavior expert at Stanford’s School of Engineering, shares that scaling is often about less, not more:
“Scaling is actually a problem of less… There are a lot of things that used to work that no longer work, so you have to get rid of them. There are probably a lot of things you’ve always done that have slowed you down without you even realizing. “
6. The departments are less coordinated.
The problem: You once sat together at the same table, but now your team has multiplied. Your sales team will have their own meetings while the marketers talk to each other. And data silos have become established.
How To Avoid It: Successful scaling of a company requires excellent communication and collaboration. Make sure your departments work closely together, take individual responsibility for overall business goals, not just department numbers, and make sure you synchronize your tools transparently.
How to fix it: No surprises here; You solve unbalanced teams by increasing alignment. That means more personal time, collaborative technical tools and cross-departmental projects. Also, make sure your data is in sync to troubleshoot silos.
7. The contact management gets messy.
The problem: As your company is using more apps than before, the number of contacts in your database will multiply quickly. And they’re not even close to being organized.
How To Avoid It: The most effective way to prevent and fix messy contact management is with a two-way data sync tool. The setup allows you to quickly align contacts across all the right apps, with just the right data and segmentations synced between tools.
How to fix it: It’s never too late to introduce two-way synchronization and get your contacts back in order. You can also use this as an opportunity to do a contact cleanup and get a clearer picture of your leads and customers.
