One of the most important goals in running a business is growing the company. If the business fails to grow, it stands a good chance of stagnating. Slowly, sales might start slipping and over time the company might face collapse. On the other hand, rapid growth also can be a company’s undoing.
The key is to sustain steady and realistic growth. But for an entrepreneur growth often can be delayed or even stopped when problems emerge.
Here’s a closer look at some of the problems that can stall a company’s growth and a look at how they can be overcome through business mentoring.
1) Running out of money
Almost all businesses need to start with a certain amount of seed capital, but many entrepreneurs underestimate how much money it will take to launch and operate a company before it becomes profitable. As a result, problems occur. After all, depending on the nature of the business, inventory needs to be bought, office space rented, signs created or people employed. It can take a while for sales to start coming in and even longer before those sales exceed the costs of doing business and the company becomes profitable.
When the seed capital runs down, or the business hits a rough patch and loses money, a business owner is left to try to borrow more money. Not only does that take time and effort, it also detracts from the running of the business.
The answer is rather to overestimate the start-up costs. In that way, a company can be sure the costs are adequately covered.
Another answer is to set up a source of capital on which you can draw when times get tough, particularly if you are confident that sales will increase in a month or two.
2) Failure to stand out from the competition
Problems that deter growth arise when a business does not differentiate itself from others in the marketplace. Offering the same as everyone else can have the result of effectively preventing significant growth.
Business Advisors sometimes invite entrepreneurs to complete the sentence, “My company is the only …” in order to find a way that you are unusual. Your business might be the only florist in town, for example. Yours might be the only restaurant that delivers chicken wings. Or you might be the only plumber that offers free quotes.
The stronger the differentiating factors, the greater the chances that your company will be able to grow.
Although this issue should be addressed in a business plan, it can be overlooked or not fully assessed before a company is launched. The result is that a company fails to grow because it cannot compete effectively in the open marketplace.
If you cannot find a way in which your company is different, create one. Tweak your company so it is special in some way. Move to a new town, change your company’s way of working or establish something you can do that no one else in your field is doing. Once you have determined what the difference is, use it in your advertising.
3) Resisting new ideas
A company can run into problems that restrict its growth if it is not finding new innovative ways of producing a better product or delivering an improved service. Instead of consistently running a business, in the same way, an entrepreneur should be continually searching for ways to do it better.
Generally being open to new ideas means taking calculated risks. It is easy to sit back and let the business run on as it always has. After all, it is making a fairly decent profit. You are afraid that a new idea might fail to be effective and the company might lose money. But unsuccessful ideas should not be a reason to stop trying new ones. After all, one of those ideas might open many new doors and bring with it a new growth phase.
Not only that, but a company can learn great lessons from its mistakes.
Of course, if you keep failing because you make the same mistake over and over again you will have learned nothing. Discard ideas that prove to be unproductive and pursue new ones.
Growth from new ideas can take many forms. Among them:
• Gaining new customers
For an innovative entrepreneur, growth could come as a result of expanding into new areas, for example. Delivering a service in an adjoining suburb that does not have the service will mean new opportunities. Opening a store in a new part of town will mean a host of potential new clients.
• Embracing new technology
In today’s world, technology is growing by leaps and bounds. So much so, that an entrepreneur who fails to adopt a new way of doing business through technology is likely quickly to fall behind, lose out to competitors, and fail to grow.
• Hiring new employees
Clearly, new business must be generated to cover the costs in acquiring the staff. But growth often will follow in the wake of new employees who are encouraged to go out and seek new business.
4) Letting expenses get out of control
When a company is launched, the temptation is to make it look impressive. An owner will rent expensive office space, invest in the best in office furniture, particularly should customers enter the premises, and generally give the company a quality look and feel.
Doing so is great if you have the money, but those expenses could soon come back to haunt you when income is running at a lower level than you anticipated.
Such costs can stop your company from growing because so much has already been spent or is being spent on unnecessary items.
It is better to start small and invest in quality but affordable amenities. Many expenses can be delayed or excluded. Once the company is growing and generating significant profits, you will have the chance to look at improving your amenities if necessary.
There are always expenses that can be cut if you look carefully. A Virtual CFO can definitely help with this process.
5) Allowing your passion to wane
When entrepreneurs launch a venture, they usually have a passion for the business. It is their dream come true and they are determined that it should succeed. Indeed, determination and passion are often cited as prime factors in a company’s success.
What is sometimes forgotten, however, is that the passion that originally started the business can decrease over time and become a problem. The business is not quite as exciting as when it was launched.
A lack of drive can cause the business to slide downhill. Growth in the business will fall away. No longer is there that determination to grow the business.
The passion needs to return or your drive toward increasing growth will fall away as well.
6) Permitting unexpected setbacks to change your course
Setbacks can often occur in a company, particularly one that is growing, trying new ideas and reinventing itself. But allowing these setbacks to deter you can be a significant factor in holding back growth.
When setbacks hit, determine whether you are still on the right track. If you are, convert the setbacks to learning experiences, pick yourself up and set the company back on its growth course.
Before too long you will be growing again.
7) Failure to check the market
Others are always out there trying to outdo you. They might be set on gaining your customers. Yet you do not always know what they are doing and sometimes even whether they exist. Yet your company is failing to grow as effectively as it should and you are not sure why.
It could be the competition that is drawing off your clientele.
Do a thorough search of who your competitors are. Search the Internet, check out trade associations or use any way to track them down, depending on the nature of your business. When you have listed them, conduct an extensive study of what they are selling and how they are selling it.
It’s possible that you need to adjust your business, even reinvent it, to attract those customers back. It might be prices. It might be customer service. It might be rewards points. The key is not necessarily to imitate them but to go a step better than them.
In other cases, it might not be true that your competition is taking away your customers. There might be a segment of the market that is not being served. All your competitors, or even if there is only one, might be directed at serving the high-end market and have forgotten the low-end segment. Here is your chance to fill the gap.
In addressing the above challenges, if you find yourself feeling like you are reaching a limit to your ability to succeed, you are probably hitting the success barrier. Our Next Level Navigator process is specifically designed to help you break through the success barrier to truly experience business growth like never before.