I recently came across a thought-provoking statement: every time a company grows 3X, something breaks. This idea stuck with me, and I couldn’t help but wonder how I would handle such a situation. As a coincidence, I soon found myself working with clients experiencing accelerated growth over the past few months. They reached a point where their systems started to break down.
Today, I want to share some of the challenges you will face when your business grows 2X-3X. I will offer insights on preparing and anticipating these issues.
The desire for growth is inherent in every entrepreneur and I know you are no different. It’s why you are in business in the first place. You focus your attention, efforts, and resources on expanding the business and increasing revenue. When growth is steady over a longer period of time, it’s inevitable for the business to reach a point where things begin to break. It will start with small mistakes and deviations from the standard process. It will later escalate to failed deliveries and significant project delays.
Many business leaders fail to recognize that what works today may not be effective when the business has tripled in size. They build systems and structures for their current needs rather than focusing on the business needs in 6-24 months from today. In some cases, they don’t establish systems, relying instead on ad hoc structures that are prone to errors and lack replicability. This approach works until they hit the first wall.
In this article, I will bring light on the importance of planning and adapting for growth, so your business can thrive during rapid expansion.By anticipating and preventing issues, you’ll be better prepared to scale your business.
As a business leader, you want to always think 12-24 months ahead and build for what is coming.
Let’s dive into the 5 common problems I’ve experienced first hand during rapid business expansion:
- Problem 1: Systems and processes break
- Problem 2: Outgrown software and tools
- Problem 3: Operating costs spiral out of control
- Problem 4: Teams become demotivated
- Problem 5: Further growth is hindered
Problem 1: Systems and processes break
One of the most common problems of rapid growth is that systems and processes are not designed for scalability. . It becomes difficult to maintain quality standards and meet customer expectations.
To address this, it’s essential to think about how your business will look 12-24 months from now. Goals and targets can be a source of inspiration, think what having them achieved looks like. Building systems and processes with future growth in mind will set a strong foundation for the business expansion.
Consider building scalable system and use the following checklist to do so:
- Flexible Processes. Scalable processes should be adaptable, allowing adjustments as the business grows and evolves. This includes adding new features, adjusting workflows, or integrating with new systems.
- Standardized Procedures. This helps maintain consistency and quality control as the business scales.
- Modular Components. Breaking processes into components allows for easier management and optimization. This approach enables businesses to improve individual components rather than overhaul the entire process.
- Performance Monitoring. Monitoring and analyzing process performance is crucial for identifying bottlenecks and inefficiencies. Regularly reviewing KPIs enables data-driven decision-making and helps businesses scale processes effectively.
- Seamless Integration. Scalable processes integrate seamlessly with existing systems and tools. They aim to create consistency and streamlined workflows. This includes other processes or tools such as CRM or accounting software.
- Detailed Documentation. Documenting processes in detail enables consistent execution across the organization. It also supports training efforts and facilitates communication during periods of growth.
As a leader, it’s your roles to prepare the business for resilience in the face of challenges. With the right strategies in place, growth is less likely to impact your business in a negative way.
Problem 2: Outgrown software and tools
Experiencing rapid business growth can be both a blessing and a curse.It is a clear indicator of success but it also brings forth the challenge of outgrowing the existing infrastructure. This issue becomes more evident as your business experiences a growth of 2x or more.
When tools and software become outdated, it sets the ground for variety of problems:
- Decreased performance and increased frustration. Staff may struggle to work around system limitations, leading to a drop in performance and a rise in frustration levels.
- Costly mistakes and revenue loss. Team members will be tempted to find manual workarounds to compensate for system limitations. This increases the risk of expensive errors and negative impacts on the revenue.
These challenges will be evident in companies that have experienced exponential growth:
I’ve witnessed a real-life example of a company that underwent rapid growth for five consecutive years. In this case, the company only implemented basic software and tools during the first two years of its existence. The company’s primary focus was further revenue growth, so they rarely dedicated time and resources to improve the systems. By year 5, their workflows where impacted due to manual, non-standardized processes.
To ensure that your company reaches its full potential during periods of growth, be constantly on the lookout for tasks to be automated. It will result in less repetitive tasks for human resources, less errors, more efficiency. Who does not want that?
What makes a difference for me is conducting regular reviews and automating my business processes. This proactive approach means that I’m always thinking 2 steps ahead. I think about what can I automate next to free up more time for meaningful, deep work on the business.
Small businesses often tend to suffocated by manual work. They hesitate to implement software tools as they are concerned by the implementation efforts or costs. The data tells us otherwise: it is more cost effective to automate workflows compared to the costs of human resources for the same task.
Here are a few tasks I automate using software tools to improve efficiency and reduce manual labor:
- Appointment Scheduling. Using a tool for booking, confirmations and reminders for appointments saves valuable resources. I basically eliminated the need for a virtual assistant to handle these tasks.
- Project Management. Here’s what I prioritize in a project management tool: task automation, progress tracking, and auto reminders. This allows project managers to focus on strategic aspects of the projects while the tool handles routine tasks.
- Customer Relationship Management (CRM). Most CRMs have automation capabilities for contact management, lead tracking, follow-ups, and reminders. By leveraging these features, sales teams eliminate administrative work. This means more for sales, ultimately increasing revenue.
- Onboarding and Training. I use automation tools to improve the employee onboarding experience. I streamline the process, deliver personalized content, track progress, and schedule follow-up tasks. All these without the need for administrative support. Similarly, I’ve experimented with client onboarding and automation. This addresses a critical scalability issue for small businesses.
- Sales and Invoicing Process. I believe in automating non-essential human interactions. In the sales and invoicing process this is quote generation, invoicing, and payment reminders. This approach will lead to cost savings and increased accuracy. In turn it allows businesses to save on employee expenses and reduce the risk of errors.
- Payroll. I work with global businesses with very diverse payroll needs. Using the right tools, I have been able to automate the entire payroll process, from time tracking to approval and payment. These tasks would otherwise take days to complete, and I reduced them to just a few hours or less.
- Reporting and Analytics. Automation tools are great resources to gather, analyze, and visually represent data. I use them to generate real-time reports and insights. This is essential for data-driven decision-making and powerful for businesses looking to scale.
- Marketing. In my experience, a lot of the marketing execution can be automated. For example: email marketing campaigns or social media posting. Automating these tasks translates into efficient content delivery and more time for strategy.
To ensure steady and controlled growth, it’s vital to rely on powerful tools and automated workflows. Protect your teams from doing repetitive work and focus their attention on high value work.
Final Thoughts
In this article, we’ve explored several challenges of businesses experiencing rapid growth. I touched upon the importance of creating scalable systems and the impact of choosing the right tools. In a follow-up article, I will describe 3 more problems businesses encounter during expansion. I will also offer practical solutions to address them.
As you reflect on the insights shared in this article, consider how you can apply these lessons to your business. Start by identifying vulnerability areas and be proactive about them. Remember, the key to scaling beyond 2-3x is to adapt, and continuously evolve your systems and processes.