If you’re thinking this sounds impossible or crazy, well, you’re not alone.
That’s because, no one ever expects something good like growth to also be bad.
But as we already know.
Too much of a good thing can be bad; especially, when that good thing also happens at the wrong time.
Sadly, it happens to lots of businesses with a promising future.
You’d be surprised at how many of them have failed – just because they grew big too fast.
how’s that possible?
Fast growth is one of those few dark truths in business that most people don’t talk about.
And, until you experience it yourself or witness someone go through it – you’d never believe it’s possible.
We all know things like more sales, demand, customers, suppliers, vendors, good employees and so on, are good for business.
We see them as signs of good progress – and they are.
But they can also put your business in danger if your business, doesn’t yet have the capacity to handle any of that.
Take sales for instance.
You might be thinking, “Hey, I need more sales. More sales is better. The more sales I make, the faster I grow, the better off my business will be”
And there’s nothing wrong with that.
After all, who wouldn’t want to sell more?
But, until you’ve:
- carefully analyze your situation,
- understand your numbers,
- make sure more sales is what you really need,
- and that, you’ve got the capacity to do more sales,
You’re going to run into a problem where your sales growth runs you into the ground and kills you.
How?
Well, let’s go into detail on why and how fast growth can put your business in a very impossible situation or even kill it.
1. brings all sorts of headaches
Okay, so you got a good review from a critic or someone said some good words about your business on the local radio – or something.
And all of a sudden, your business is trending.
People are going crazy for your products or services; demand is up and orders keeps pouring in.
However, these orders are 3 to 5 times more than what your business can handle right now.
Obviously, the best strategy here would be to turn away many customers and only serve those you can.
But that’s easier said than done.
Because not every business can easily turn away customers with no dire consequences.
Well, those in the service business like hotels, restaurants, salons, tailors, designers and so on, could get away with it.
Those businesses actually become more appealing when they turn away customers.
But not for those in the retail business.
Retailers lose credibility and many customers, every time they run out of stock or fail to meet demand levels.
In the end, you’d have to decide between, doing way more than you can handle or risk your business by turning away customers.
2. overwhelms your capacity
Everything has a limited capacity; so is your business.
Your restaurant is limited by its number of tables, shop size, staff, and so on.
A manufacturer is limited by her factory size, machines and labor; even retailers have a limited shelf space and ability to buy and store goods.
Aside that, how every business operates, also has a limited capacity.
Now, if you decide to take on orders 3 to 5 times more than what you can handle, then you’ll obviously need a master plan or strategy.
Without it, you’ll blow up your capacity to the point that, even doing simple day-to-day activities becomes impossible.
Instead of progress, you’d rather find yourself in chaos – all because you are unprepared for that level.
And you won’t lose only customers if you fail to deliver.
Nope.
You’ll also lose key resources and the reputation of your business.
First, it’ll mess up your systems and processes; which will then lead to crappy products or poor product quality.
And then, many of your key employees will quit for being overworked and overstressed.
3. creates huge cash problems
To make more sales, you first need to invest more in sales.
You’d need to buy more materials, more equipment, hire more people; basically, more of everything you’d need to sell more.
In other words, you’d have to borrow money or use cash meant for other things on sales – with the hope that you’ll quickly get your money back after you sell.
But things are not always that simple.
Particularly, if you mostly sell on credit and your creditors notoriously take more than 30days to pay.
Plus, when they do pay, they hold back a portion for returns, damages and everything else.
So, you’re like “Great, I sold 10,000 units”, but you’re facing bankruptcy.
Your cash is locked up in your inventory and credit, and you can’t:
- pay this month’s bills or your suppliers
- or meet next Friday’s payroll,
- or make your next loan payment that will be due in 18 days
- and so on.
4. kills innovation
It’s exciting to see people go crazy over your products.
And when that happens, you never want it to end.
You want to keep the excitement going, and keep selling more items.
So, you keep bringing out new stuff.
Besides, you don’t want to be called a “one-hit wonder”.
It becomes tempting to regularly release new products (new designs, new tastes, new colors, etc.) to keep up with the fast growth.
But, what that actually does is, it kills your own successful products – every time you release a new one.
Plus, sooner or later, you’ll start to find it really difficult to keep up with your own pace of releasing new products regularly.
Your creativity battery will quickly drain out and you’ll quickly run out of new ideas and new innovations.
In the end, your new products will barely be anything “new”.
Your new new or latest will start to look, taste and smell just like the “old”ones.
5. causes burnouts
Failure is not the only thing that can cause anxiety, frustration and depression.
High expectations can also have the same effects.
Especially when everyone expects you to keep delivering at a level that you’re not prepared for.
Like, serve 400 customers a day, when you can’t even manage to serve 100.
Or manage 20 employees when you’re yet to figure out how to manage 5 people.
And it doesn’t matter how willing or determined you are.
You’ll easily get overwhelmed or burnout if everything is happening at that size, that fast.
You simply won’t be able to make smart decisions if you’re tired and constantly under that much pressure.
Wrapping it up
Obviously, everyone wants success.
We dream of it every day, and we want to get there as fast as we can.
But always remember that good things can also be trouble when they come at the wrong time.
So, instead of waiting for success to show up – prepare for it.
And if it does show up earlier than expected, find those with the skills to help you manage it.
Small To Sprout 