Don't Grow Too Fast!
Growth is the goal of every business. If you’re an entrepreneur, you aren’t satisfied with a stagnant level of success, you’re always looking to improve. It’s a major part of the entrepreneurial spirit – business owners are always seeking more.
But growth comes with its own set of challenges, and businesses that aren’t prepared can suffer because of growth.
For a large example, take GoPro. The popular “action camera” was the holiday gift of the year. Stores couldn’t keep inventory on the shelves, and GoPro did everything they could to increase production to meet the demand. Stock prices went through the roof, and the business grew at an exponential rate.
Fast forward just two years and GoPro’s stock is falling just as rapidly as it rose. They didn’t have a great plan for growth and spent much of their time and effort keeping up with staggeringly high demand. Now, investors are worried their product line may not be diverse enough, and the market for “Action cameras” has not only diminished, but more competitors are entering the field. If a plan had been in place to diversify their products and prepare for a dip in sales, they would be continuing to grow rather than taking a step back.
Now, this is of course not a problem most small businesses will face. GoPro is a massive company, one that will survive this dip in sales. So let’s look at another example.
In my childhood hometown, there was an incredibly popular Mexican restaurant. Shortly after opening, lines could be seen on a nightly basis outside the door. Reviews were great, customers were happy, and the food was consistently delicious. Everything was going well.
They were so popular they quickly opened 3 other locations and remodeled the original restaurant. It seemed as if this brand would become a regional juggernaut in the industry. But the new stores presented the owners with more problems than they were equipped to handle.
The second and third stores faced food consistency issues. Bad reviews started popping up online, and the owners had not set up a way of managing complaints and feedback. The local health department downgraded one of the four locations for health violations. Another location’s manager got arrested for hiring undocumented workers. The restaurant that used to be known for quality and consistency was now tied to too many negative thoughts.
The owners were forced to close the other locations one by one. They returned to the original location with the same kitchen staff and initially positive experience, but the damage was done. Their business limped along before shuttering their doors just this year.
I use this example because the owners of this restaurant had something special on their hands. With proper planning and preparation, the scale-up operation could have been successful, and they could have continued to grow.
That’s how growth can be dangerous for your business. If you want to grow, you must prepare for it first. You have to have a plan for keeping your brand intact. If your customers love your personal touch and attention, you have to figure out a way to scale that personal touch to more potential customers. That may require hiring more help before scaling up, to make sure no customer is left behind.
The bottom line here is that you must shift the way you think about growth. Growth without a plan can have devastating consequences for your business. Growth may be a good thing, but planned and controlled growth is a great thing.
Alex Boyer is a Community Manager and Content Ninja for Duct Tape Marketing. You can connect with him on Twitter @AlexBoyerKC