The 3 Biggest Dangers Of Rapid Expansion

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Once you’ve gone through all the trials of getting your business off the ground in the first place, seeing it begin to develop and expand is a very exciting time. While all entrepreneurs should have a plan in place for making their business grow, pursuing a course of rapid expansion can be very risky. Here, we’ll look at three of the biggest dangers of rapid expansion, and what you can do about them…


Increased Demand and Cash Flow Problems

The cost of running a small business can be a massive challenge to control, especially as a direct follow-up to the capital outlay it takes to actually open the business in the first place. Right now, your business may be dependent on credit as you try to develop sales and revenue. As you push on towards higher sales, you can expect your recurring expenses to grow, and even exceed your monthly revenues. Provided your collections are on-track, this won’t be an insurmountable issue to get around. However, just a few cycles of delayed collections could easily land your business between a rock and a hard place. Anticipate the possibility of a cash flow crunch by coming up with a solid backup plan for raising funds, either through your own emergency sources or a line of pre-approved credit from your bank.

High Costs Leading to Inefficiency

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When your business is growing quickly, you’ll be forced to act quickly to accommodate the expansion. You may need to hire a mass of new employees before the organization is really ready for them, or suddenly find yourself having to hire office movers when the offer on a great property pops up out of the blue. These are just a couple of the sudden changes that can be very hard to manage for an inexperienced business owner. When your operation develops too fast or too soon, you’re going to find it extremely hard to stick to your original business plan, which will assure the whole operation runs smoothly and efficiently. Finding the time to redesign workflow and accommodate for increasing demand will be a challenge, even if you’re the most organized, efficient person in the world! While higher demand should be a good thing, it can really come back to damage your business if you run into issues like not being able to train employees, not being able to source materials to fill orders, and so on.

Customer Service Issues Damage your Brand

Every business will have to deal with one or two customer complaints. However, if you fail to scale your business in a smart way, your standards of customer service can suffer immensely. If there’s too much of this in too short a space of time, it can drive your brand into the ground. In today’s world where social media dictates so much of a business’s reputation, it’s going to be very hard to keep customer complaints and qualms under wraps, especially if your human resources are stretched as it is. As you move ahead with your business, make sure you’re protecting your professional reputation adequately!

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