Managing Small Business Growth

Posted on December 29, 2011 by Debbie Dragon

 

Small business owners generally love the word “growth” since when used in relation to a business, it usually means success. A growing business is a thriving business, or so most people believe. Unfortunately, many small business owners discover the hard way that business growth may result in problems if your business isn’t equipped to handle that growth – and can even kill your business all together!

All growing businesses eventually reach their limit. You might run out of employees to handle the new volume of orders or customers. You might not have enough product to meet demand. Most small businesses struggle to manage operational issues during a growth phase, and it can be hard to decide whether it’s time to hire additional employees or if this is just a short-term spike in sales or customer volume. The following are tips for managing growth in a small business.

Maintain Owner/Management Role

If you find yourself performing the tasks of your employees – creating the products or fulfilling the services your company offers, it’s time to take a step back. As the business owner, you should maintain a management role in the organization. If you don’t have enough manpower without you on the front lines, it’s time to either replace existing employees who are not generating the necessary return on investment (what you pay them), or hire additional employees so that you may focus on the administration, management, and strategy.

Add Organizational Systems and Procedures

When a business is started, many small business owners check over the details of their employee’s work, correct any mistakes or problems before they reach the customer, and generally just keep a close eye on how everything is running. If you are growing rapidly, you won’t have the time to continue this with as much detail. A business needs systems and procedures for managing staff and providing the products or services of the company. There should be product or service quality control standards to ensure the business turns out the same level quality whether you are in a slow period or a growth period. Look at your daily business operations and determine what tasks can follow specific systems and procedures, and then get everyone on board. When your business relies on systems and procedures, it will manage growth much better than one that simple scrambles to keep up as business expands.

Keeping Growth in Check

For most business owners, growth is welcomed but it’s important to keep your growth in check. When you start generating more sales than you had previously, it can be tempting to spend more money than you’re able to – perhaps you decide to upgrade computer or technology, or hire more staff to handle the new business growth. Both are excellent uses of business income, but if you’re not careful you may spend more than you can afford and then your financial stability could be damaged. The growth phase that should have resulted in higher profits could easily turn around and cause a cash flow problem if you aren’t careful to keep the growth of the business in check.