It may sound like a good problem to have, but rapid growth can actually capsize a business just as quickly as stagnation. However appealing it may seem, unchecked business expansion is often accompanied by specific liabilities and potential dangers.
Fast growth inevitably places higher demands on small business owners and individual employees. When you or your employees are asked to do too much, performance and morale can suffer. What was once a unified team may soon become a bickering, resentful collection of individuals. What's worse, when small business owners are forced to wear too many hats, they often lose their passion. They may also be forced to make rapid hires without fully vetting their new additions.
Great products and great service may be the fuel behind your rapid growth. Unfortunately, it's often difficult to maintain these standards once you become understaffed and overworked. Many times, unchecked expansion forces a business to cut corners. As things become more and more unwieldy, inferior service, declining product quality and customer dissatisfaction begin to take root.
It may sound counterintuitive, but increasing demand can actually lead to declining profits in certain situations. This typically occurs when outgoing costs begin outpacing a small business's cash flow. The usual culprits include employee overtime and growing inventories, which often become necessary to keep up with demand. Many business owners often find themselves in a constant cycle of borrowing just to keep up. This debt can create a dangerous situation, when demand slows down without warning.
Most entrepreneurs start their own businesses so they can be their own bosses, set their own hours, follow their passions and deliver services and products they can be proud of. Unfortunately, unwieldy expansion can turn a job into a constant crisis-management scenario, which can make it hard to get out of bed in the morning. Over time, it can be difficult to maintain passion, when you are constantly struggling to replace unsatisfied employees and customers.
Growing a small business at the right rate is both a science and an art. While many entrepreneurs race forward without regard for consequences, savvy business professionals are able to carefully determine an optimal rate of business growth. This is best achieved by setting realistic goals, recognizing potential liabilities and maintaining strict standards for product and performance. It can also mean a temporary reliance on outsourced staffing and facilities until a company is seasoned enough to take on these responsibilities in-house.