The Hazards of Growing Your Company Too Quickly

Growth is certainly a good thing for most business owners. It can be a measure of validation for all of the hard work that went into starting a company. Naturally, one can assume it’s a good thing for businesses to be growing, as it allows them to hire more people, continue with expansion, while helping to fuel the economy.

But there can be a downside to a small business growing too fast too soon. It can be difficult enough running a small company, so once that company starts to experience rapid growth, issues may crop up that become deterrents to your success. For one thing, the success of a business is often determined by the quality of the people hired.

If you don’t hire the right people, the culture of a company can become jeopardized. If your employees grow despondent about management, or the direction that the company is going in, this can turn out to be a disaster in the making. There was a formula that you followed that made you successful in the first place, and as your company grows, you’ll want to continue to surround yourself with people that are in tune with your vision.

How to gauge your success versus your growth

Keep in mind that more sales doesn’t necessarily equate to more profits. You can wind up with different levels of scale along with different levels of expense, and you may not always make money as you focus on increasing your sales potential. This is a good reason why you should look at your financial data, beyond just the revenue line on your income statement. This allows you to make decisions based on trends across several metrics.

While it doesn’t always seem to make sense when venture capital or private equity firms approach a private company and says, “We’re going to provide you with funds in order to help your growth.” That’s all good and well, but if your small business growing too fast doesn’t grow in the right way, you could be in for a rough ride. The capital in place can actually be a deterrent to your ability to grow at a proper pace. Manage your business in a way that you grow at a rate that is comfortable for your company and your staff.