All entrepreneurs dream of reaching the expansion stage of their business. The one in which they can finally open their production plant, buy machinery, hire more employees, or invest more heavily in marketing. But unfortunately, there are thousands of failure stories when scaling a company, and the explanation lies in the most common mistakes we can make.
That is why today we want to tell you what those mistakes are, and how you can avoid them to ensure orderly and firm growth. Take note!
As business development experts explain , an entrepreneur should never “decide” that she wants to scale her business. Expansion must always be organic, that is, it must happen as a result of a series of measures taken previously. For example, investing in new technologies, improving production processes, or adopting e-commerce. One of the main mistakes is trying to grow a company when it is not ready yet.
Another common mistake is trying to scale the business horizontally, by working on too many projects or areas at once. To avoid falling into it, review the strategic plan and establish priorities according to the growth objectives set . With this document, you will be able to decide, for example, if the most important thing is the development of new products, the opening of more branches or an online store, or the launch of a more aggressive marketing campaign.
One of the biggest dangers during the expansion stages is forgetting about the customer, and ending up affecting their level of satisfaction with the product , the purchase process or the quality of care. It is not just about knowing the consumer well , and bringing him the solution he needs most: in the midst of the whirlwind of growth , and with so many changes in the company, it is essential to keep it at the center of the strategy and make sure that we do not We limit ourselves to maintaining excellence in our interactions with the brand, but we even improve it.
When a business is booming, you have to hire more staff and give them the instructions so they can do their job well. To share this information and give new collaborators the necessary support , it is essential to have operation and training manuals, to shorten the learning curve and ensure quality in all processes. Trying to do it in an informal way will mean a waste of time and a lot of trouble.
Receiving a lot of orders from customers is great news when we are in full expansion. But if we discover that there is no money left in the bank to buy the inputs, or to pay the fortnight of the employees, how can we continue? Make sure you have the necessary capital to finance the expansion , or ready-to-use sources of financing , such as a bank loan or the contribution of a new partner.
When it comes to human resources, it is becoming increasingly clear that attitude matters much more than employee knowledge and experience. And in the face of the challenges to come, it is vital to be able to lean on a team enthusiastic about the idea of ??scaling the business. So, when hiring new collaborators, focus on the job description and the candidates’ resumes. But above all, in his commitment and passion with the new projects of the company.
The collaborators who have been with you since the founding of the business , and who remained loyal in the most difficult moments, are one of the most important assets of the company. Be clear with them about the demands of the new stage of growth, but do not pressure them to the point of causing fatigue, demotivation and quitting.
Also remind them of how important they are to the company, especially if you are hiring a lot of new staff.
When we have good results with a certain product, we can fall into the error of manufacturing it without having a rigorous estimate of future demand . This excess production can lead to stock management problems, an increase in operating expenses, and a drop in the profitability of the company . Analyze each month, and very carefully, the sales projection and how responsive it is to a sudden increase in orders. And make the necessary adjustments in the facilities , machinery, production processes and the purchase of inputs.
Trying to scale the company without having the necessary technological infrastructure is another common mistake among entrepreneurs and SMEs. It is not only about investing, for example, in the automation of the production process, but also in administration and accounting . For example, with the right business management system you will be able to manage inventory more efficiently in the face of increased sales or delays by suppliers. Or with a good comprehensive payroll system , you can automate the calculation of wages, vacations, bonuses, tax withholdings and other deductions.
Finally, keep in mind that no matter how good the prospects are, any expansion project can fail. To ensure the survival of the business , it is necessary to have clear measures to face unforeseen events, and that is a lesson from the Covid-19 pandemic that we cannot ignore. So identify possible threats , such as the emergence of a new competitor, or problems with your current suppliers. And define in advance what are the measures you are going to take to get ahead.
