Growing pains: The perils of unplanned expansion – Part 1
June 19, 2018
June 22, 2018
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Growing Pains: The perils of unplanned expansion – Part 2

In an earlier blog, we discussed some of the things to keep in mind when expansion opportunities present. Unplanned expansion can be as dangerous. We share a few other factors that create risk in expansion – keep these three issues at your highest attention and success can be achieved. If not…..

Keep Customers Loyal

Good customer service is often a significant component of small business success, but strangely it is also one of the first things that is overlooked when businesses go into expansion mode.

Employees get caught in the ramping-up activities and lose track of what is happening with existing customers. The focus on meeting the new opportunity to be successful can be to the detriment of those customers who have been loyal and provided the base from which to expand and customer leakage occurs.

Securing new business through the growth phase can also be hard to factor in to activities. The key to retaining customers is to maintain the team focus that ensures current customers continue to receive the attention and service that has made you their supplier of choice.

Forecast Cash Flow

Sudden expansion can involve investment to handle production of new orders that does not translate into cash in the bank for some time. The business still has to pay its creditors and employees.

Poorly managed or inadequate cash flow is a major cause of expansion failure. Maintaining a strong cash flow and closely managing it when going into a period of rapid growth will make the process much less risky to a business' survival.

Avoid Disagreement Among Owners

Multi-ownership can pose its own threats to the success of an expansionary drive. Ownership arrangements that have functioned effectively prior to expansion activity can become problematic.

Business growth invariably increases the complexity of the business and in that environment the views of different owners on such things as how to run the business and the vision of where it should be going may diverge.

Conflict at the leadership level will impact the speed of decisions, the quality of decisions and potentially the implementation of the changes required to deliver the growth.

Particularly hard to deal with is the situation that arises when the expansion takes the management of operations beyond the competence of one of the owners so that they are no longer making a real contribution to its running. When this happens the departure of one or more partners may be necessary to establish a unified direction for the growing company.

To succeed, businesses must grow and business people should not shy away from growing because there are challenges involved. Businesses don’t fail because they grow. They fail because they don’t manage their growth or grow their managers.

There’s no substitute for expanding according to a sound business plan.

By Graeme Fitzgerald
Jason Manning
Jason Manning
Jason Manning is a cutting-edge Change Facilitator, Business Analyst, Leadership Coach and Business Growth Specialist. Jason is driven by the desire to see business owners earn what they want to earn, experience freedom in their business and create a lifestyle they have always wanted. The skills and knowledge he possesses allow Jason to provide business owners with the tools and the mindset they need to succeed. This is his legacy, what he contributes to the world. Individuals living to their true potential, integrated at all levels.

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