Ask an Expert: Plan for growth, don't jump in too soon

Q: I started a web design company last year and it's going great – I have more work than I know what to do with. My problem is that I have been asked to do a site that is much bigger than anything I have done before and it will take all my time for a while. Should I outsource my current stuff, juggle better, or what? — Alicia

A: In the life of any small business, there usually (and hopefully) comes a time when an opportunity arises that can allow you to take a quantum leap. Maybe it's a contract with a big company, or a great distribution deal, or a competitor goes out of business. Whatever the case, when it happens, we are all inclined to say yes and reap the rewards.

But know this: There are not always rewards for growing fast. There are pitfalls a plenty, and you better be aware of them if you want to avoid them.

Longtime readers know that when I was growing up, my dad owned some carpet stores. He and his partner started small, and my dad was really happy at the beginning – strategizing, selling, and scheming — all things entrepreneurial. The business grew slowly and surely until it reached a tipping point, and all of a sudden, business just took off. My dad and his partner were opening a new store every year.

Sounds great, right? Wrong. The bigger the chain of stores grew, the more unhappy my dad became. Suddenly, instead of being a crafty entrepreneur, he found himself being a boring middle manager. Finally, after growing the business to 16 or so stores, dad sold out to his partner and started over with one huge carpet warehouse. He never grew it past that one store again, and that was the happiest I ever saw him in business.

You have to really think hard and be ready when the moment of growth comes, because the changes wrought upon your business will be profound. If you are not really ready, you could end up miserable like my dad, or worse, out of business, or being sued, or facing bankruptcy.

I remember a client who owned a restaurant. We worked up a great PR campaign. The local newspaper wrote a glowing story in the Friday editiion. The problem was that my client wasn't ready for the avalanche of business that hit her that weekend.

She didn't have procedures in place to deal with so many people, nor did she order enough food. That weekend, instead of finding a great restaurant, potential customers found a place overwhelmed and out of food. She never did have a second chance to make a first impression. She blew it.

Those highflying Internet start-ups at the turn of the century also learned this lesson the hard way. Rapid growth, especially for a new business, too often leads to big problems, because the company is neither established nor experienced enough to handle all the issues that accompany big deals: increased labor demands, extra capital requirements, the need to allocate resources better, and so on.

I know it is hard to say no, and we never know when that great opportunity will arise. The savvy entrepreneur knows her limits and doesn't bite off more than she can chew. Great entrepreneurs know that a big deal can be an equally big mistake if they can't handle the extra pressure and requirements.

So I say, grow, but grow slowly. Create some institutional knowledge and skill, so when the time comes to take it to the next level, you are ready.

If it is a natural next step, go for it. But if it feels more like an unnatural stretch, think twice.

Page
  • 1
  • |
  • 2
Join the Discussion
blog comments powered by Disqus
 
You Might Also Like...