Growth is good; it means your efforts have started paying off. We all start our small businesses expecting them to expand in future. It is a significant achievement to start your small business and see it grow to the next level. But often, most entrepreneurs do not stop to consider how rapid or slow growth will affect their business. Rapid growth exposes the company to challenges related to fast expansion, and slow growth exposes the company to risks of running out of capital to support necessary costs before it breaks even.
As the business expands, the need to have more people on board increases. Employees are the force behind the success of any business, be it large or small. They get the work done and determine the quality of services. This is why companies should take their time to hire the best employees. Every business needs quality employees to help with the operations and growth of the enterprise. Getting the right employees has never been an easy process. It is a process filled with its share of challenges especially when one is tasked with the responsibility of building professional relationships with someone you have just met and hardly know.
Keeping up with expansion and hiring qualified employees can be an overburdening experience for startups. However, small businesses can still grow and succeed if they are informed beforehand on some of the common challenges associated with growth and hiring that affect startups and come up with strategies for avoiding them.
Cash Flow Constraints
Adequate cash flow is crucial for any growing business. Money constraints can be the biggest problem limiting growth and can easily kill a business. With limited cash, you may be forced to let go of opportunities that would have made a difference in your company.
Growing companies need to plan ahead. This way they will anticipate costs associated with expansion and find ways of funding if the current capital is not able to support extra expenditures.
Balancing Quality and Growth
As the business grows, you may need to bring help from outside. You may also find out that some of the skills you had for launching your business are not necessarily the ones required to grow the company. Given this, you may find yourself in need of someone experienced in pushing the company forward. You may also need people to delegate some of your activities as you look for new opportunities.
The success of any business is determined by the quality of the employees. But finding and competing for quality talent with large companies is tough, especially if the options are confined to limited cash flow.
The biggest challenge facing growing companies is balancing between working capital and hiring the right people. Startup companies find themselves in a situation where they need to recruit quality employees but are not able to meet their salary expectations or even compete with the high salaries offered by established companies. It becomes difficult for them to get high potential at a low cost.
Forgetting Your Original Goal
It is hard for growing businesses to resist significant new opportunities even if they are not in line with their goal. Most of them are trying to survive in untested territory, forcing them to try new things in a bid to see which one will succeed. Entrepreneurs are seen as risk-takers but drifting away from your goal may create an unstable situation. It may be confusing to the employees as well as the customers. A new plan may cause you to overstretch your budget.
When a small business is in its initial stages, it may not be required to pay insurance costs for its employees. However, as it expands and recruits more staff, then the healthcare legislation applies. Insurance costs become a concern to growing businesses as they take up a substantial share of the working capital which already is not enough to cater for the basic operation costs. Businesses should strive to comply as they look for alternative means of funding.
Finding Employees, Who Understand the Vision
The key to success is finding people who are willing to grow with the company. Startups tend to change as they grow. The biggest hiring challenge for a startup company is finding employees who understand that the firm is in the process of developing. When recruiting look out for someone who understands how they will fit into the equation of growth and remain motivated to be part of the team that wants to build the company into something.
Startups should take the time to find someone with the right skills and experience to do the job but more so someone who can fit in well with the culture of the company and shares the vision of the enterprise.
Let’s face it; growth is a must, and it is something that should be embraced with pride, not fear. The challenges outlined here do not condemn small business to doom upon growth. Instead, they are meant to make sure small companies handle growth well and attain success. Successful growth requires proper planning and maintaining a balance between growth and cash flow.