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Growing Your Business: Anticipate the Challenges that Lie Ahead


Growing a business, or business expansion, is something many entrepreneurs aspire to do through increasing their customer base and revenue. But sometimes the drive toward expansion is so strong that business owners may overlook red flags warning them to proceed with caution.

Here are six challenges you should anticipate when expanding your business, or warning signs that your business may have already expanded too much or too fast.

1. Budget Allocations Fall Short 
Expansion costs money, whether it's spent on revamping a business website or opening a second retail location for a brick-and-mortar enterprise. There are plenty of up-front expenses to consider, such as:

  • Additional marketing so existing customers know about the online expansion or second store location
  • The need to hire and train new staff
  • Leasing/rental costs for a second retail location

These and other unanticipated expenses may impact your cash flow situation, and if you spend more than you take in there could be trouble ahead—particularly if you're obliged to borrow funds and assume additional debt. Be sure to compile a detailed cost-benefit analysis before taking further steps toward expansion.

2. Your Employees Can't Keep Up 
The staff you hired at an earlier business stage may not be equipped to take on new growth demands in terms of productivity and customer service. Through no fault of their own, a rapid expansion can mean many added hours on the job, increased stress, and a drop in morale and performance. No business can afford such negative consequences for very long. You will likely need to hire additional employees, which might require more of your time spent recruiting and training a new workforce.

3. Your Vendors Fall Behind in Fulfilling Orders 
Without some advance warning, your vendors and suppliers might not be prepared to handle a surge in demand from your business. If they're unable to keep pace with your need for raw materials and related resources, you could see the consequences in delayed product delivery to customers and a lapse in quality control.

4. Quality Suffers 
Your business may be expanding in part due to a reputation for offering quality products or services. But hasty expansion might require you to start emphasizing quantity over quality. "Your customers will notice this shift in priorities, and you will end up losing business," cautions Chris Anderson at SmartBusinessTrends. "Never lose sight of what makes a business successful: its emphasis on providing quality and good value-for-money."

5. Customers Start Defecting 
Another unwelcome sign of overly hasty expansion can be a loss of customers. If orders go unfulfilled and quality suffers, your once-loyal customers won't hesitate to start exploring opportunities with competitors. Be on the lookout for a spike in customer complaints— a sign that your business is not pleasing your target audience as it once did.

6. Too Many Demands on your Own Time and Resources 
If you thought you were busy with your startup venture or first retail location, wait until you pull the trigger on business expansion. Some business owners may even look back with fondness on an 80-hour workweek. Keeping up with growing demand is just about impossible without additional resources and manpower. Otherwise, you could potentially burn yourself out and put the entire enterprise at risk.

Most successful businesses need to grow at some point. The key is anticipating potential problems and planning how to deal with them before they arise. As content strategist Nina Ngai advises, "Rapid growth can put a strain on your company while you're still learning the landscape of your new location." She suggests that you cultivate patience while considering "how to grow at a sustainable rate."

For many small businesses, another effective coping mechanism for rapid growth is benefiting from the wisdom of a seasoned advisory board. Consulting an advisory board can be a great way to obtain the advice you need to grow without incurring additional costs.


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This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.