Expansion is the sign of a healthy business.
Employing more staff, growing profit, building your industry reputation – these are all exciting developments that come with growth but they can also present new challenges.
For one, a larger headcount can require more office space, salary packages and HR policies to oversee the staffers needs and safety.
With this is mind, Business Insider has pulled together a list of common challenges any growing business can face, and solutions for how to tackle them.
1. Finding good people.
When your company is growing, workloads can intensify quickly. For this reason it is important staff aren’t overloaded, and that you employ more people to cover the new work coming in. But it is just as important that you hire the right people for the company.
For companies such as Apple this all starts with the hiring of management. In an interview with Fast Company, CEO Tim Cook said it was about finding people who bought into the philosophy of the company.
“Ultimately, it’s on the company leaders to set the tone,” Cook told Fast Company. “Not only the CEO, but the leaders across the company. If you select them so carefully that they then hire the right people, it’s a nice self-fulfilling prophecy.”
2. Understanding your market.
This is a critical part in the journey move forward as a company. As your business grows, so too may your market. So it is important that you stay informed and are able to adapt accordingly.
“Thoroughly research your competition,” says Gen George, CEO and founder of OneShift.
“This should be a continuing commitment from which you are constantly learning. Understanding who your competitors are and what they are offering, helps to make what you’re offering stand out. This enables you to set your prices competitively and help respond to rival marketing campaigns with your own initiatives.”
Another part of understanding your market is understanding your customer.
“People look at their customers as a challenge and sometimes adopt an ‘us against them’ mentality,” says Martin Halpen, founder of The Fruit Box, “but I think the relationship between business and its customers is like a marriage.
“You can decide to either be in a marriage of convenience or in a marriage of love, so you absolutely need to find a way to love your customer, and you’ll find that positive business outcomes follow as a result of that.”
3. Dealing with complaints.
Despite the dread that the thought of a wave of complaints might inspire, a well-managed complaint system can actually benefit your business.
Not only can complaints give businesses valuable information about how they need to improve, but they also give companies an opportunity to build on and strengthen relationships with customers, clients and employee.
The Queensland government’s business and industry portal has a list of tips for managing complaints. From interpersonal approaches to organisational approaches, see them here.
4. Cash flow.
Having good cash flow management will ensure you always have money available to pay your bills when they’re due.
Even profitable businesses can fail if cash flow is not managed properly. If you don’t have enough money available to pay your lenders or suppliers, banks may foreclose and suppliers could cut supplies.
In an interview with Business Insider US John Stephens, the CFO of AT&T, said his best piece of financial advice for any business was to remember cash generation.
“In this era of ‘free money,’ it’s still critical to remember cash generation — or, rather, consistent and material cash generation,” he said. “It’s the biggest factor in the long-term success of any business.
“This might sound textbook, but that’s because it’s true. Revenue growth and disciplined expense management will generate the cash a business needs to invest, seize growth opportunities, and return consistent value to owners.”
Not only is this sage advice for a growing business, it is wise to remember at any stage in your company’s journey.
5. Adapting strategy.
If you want to grow a successful, sustainable business, don’t ask yourself what could change in the next ten years that could affect your company. Instead, ask yourself what won’t change, and then put all your energy and effort into those things.
That’s the advice of Amazon CEO Jeff Bezos. He suggests companies should build a business strategy around the things you know are stable in time — like that customers will always prefer lower prices — and then invest heavily in ensuring you are providing those things and improving your delivery of them all the time.
“When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it,” he says.
*Disclosure: Jeff Bezos is an investor in Business Insider US through his personal investment company Bezos Expeditions.
Recently Business Insider spoke to the founder of Bigcommerce Mitchell Harper about the growth his company has experienced and how the management has adapted to it.
For Bigcommerce, finding effective communication systems was a big learning curve early on.
“While it’s fun to have 30 direct reports in the early days , no one really likes doing that – founders tolerate it because we have to, but seasoned executives won’t,” he told Business Insider.
“As you grow it becomes necessary to add layers of management to effectively scale the company.
“More growth means more layers: C-levels manage VPs, who manage directors, who manage managers, etc.”
While it is important to keep everyone across the company inform, it is just as important that they feel as though they have someone they feel comfortable enough to approach should they need to.
7. Staying on target with your company’s vision.
“Decide whether you want to be a small business or a high-growth company. They are different things,” says Sam Chandler, founder and CEO of Nitro.
“It’s not that one is better than the other — they are simply different. A high-growth company is typically going after a large, global market and actively trying to become a big company. A small business is normally going after a smaller, more localised market, and probably not trying to become the next Google.
“One key difference between the two types of business is your attitude to investment. You’re probably going to need to sell equity to venture capitalists to raise money if you’re a small company going after a big, hyper-competitive market. But if you’re not planning on ‘getting big’, you may want to try hard to retain complete ownership of your company.
“Whichever kind of small business you’re going to be – make sure you know which one it is and make decisions about your equity accordingly.”
8. Maintaining your company’s culture.
To succeed in business today, it is almost essential that your company culture is strong and supportive.
Some flourishing business are even going as far as to rename their HR departments to centre around this idea.
For example Daniel Flynn, co-founder and managing director of Thankyou, has just replaced his company’s HR department with “People & Culture”.
“We wanted to create a place where staff are seen as people, not resources,” he says. “Fast-forward seven years, and we hear team members tell us how refreshing and empowering our culture and environment is.
“From the beginning, it’s been our collective goal to create a culture where people can be themselves… We see each employee as a person with the capacity to add to the business in multiple ways – we don’t box them into a position description alone.”
Flynn says he’s seen organisations fall into the trap of seeing the employee/employer relationship as a take-take transaction when, he says, it needs to be to give and take to achieve the best for the employee and the organisation.
“What’s really cool about Thankyou is the way we honour each other. There is genuinely no gossip or ‘secret water cooler chats’; instead, if there’s ever an issue that needs to be addressed, it’s done directly with the person it involves. It takes constant work and mindfulness, but remember it’s easier to create a positive culture than it is to fix a broken one.
“No matter the size of the team, maintaining a positive culture will always be a focus for us because when a team of people that work together share the same values it brings unity and strength, empowering us to do our life’s best work.”
9. Compliance (regulatory obligations, book-keeping, taxes).
Depending on the type of business you are going to be running, there will be different requirements including licences, permits, codes of practice and legislation that you need to be aware of. As well as a range of taxes and duties that may apply to your business.
Growing companies often take risks with certain areas of compliance such as employee-related, including promotion practices or wage laws, which typically get put on the back burner during periods of growth.
To get started it is best to prioritise the areas with the greatest legal exposure and the highest resource demand.
Perhaps consider outsourcing to help with the workload. While it will be an addtional cost it will help to reduce liability, improve focus of resources on your core competencies and capture otherwise missed opportunities.
The Australian Business License and Information Service (ABLIS) can help you find the government licences, permits, approvals, registrations, codes of practice, standards and guidelines you need to know about to meet your compliance responsibilities.
Find out more here.
10. Keep the fire burning.
When your is business growing and working towards one target after the next, it can be difficult to stop and look at the success you have achieved.
Remember to embrace the passion that flared inside you at the beginning of your journey.
For Jackie Maxted, founder of beautydirectory, beautyheaven and homeheaven, this is something that she often reflects on as she continues to grow her business.
“Make sure you’re passionate about what you’re doing,” she says. “Passion will drive your business forward and help you through the difficult times. Successful businesses don’t just happen overnight (ours certainly didn’t!) and you’ll have some dark days where you just want to throw it all in, but those are the times where you need to focus on the small wins and the passion you have for your business.”
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