After successfully launching a business, your next step is usually expansion. This is necessary for your business to survive, but with it comes new growth challenges. The common pitfalls that virtually every entrepreneur faces when upsizing their business can be overcome, if you recognise them early and act.
1.Keeping up with the market
When you started your business you likely conducted plenty of market research into your competitors, customers and industry, but have you performed any research since then? Business conditions are continually changing and if you want to secure sales and increase your customer base, you need to stay up to date by engaging in ongoing market research.
Search online for reliable, published information, reach out to suppliers and business partners, get your employees actively involved and speak directly to key customers. By gathering relevant information and creating an in-depth picture of current market conditions and how customer purchasing behaviour has changed, you’ll be armed with the latest insights to help you make more informed business decisions.
(Read more: Four feedback mechanisms to evolve your business)
Has a product reached the end of its lifecycle? Do you need to introduce a new service to your offering? With current research to back your decisions, you’ll be able to consistently meet the demands of your growing, diverse clientele, identify growth opportunities and stay a step ahead of your competitors.
2. Maintaining a positive cash flow
Good cash flow control is important for any business. When it comes to smaller companies, many fail because of cash flow problems, while cash constraints are also a big factor in restricting growth. If you have expansion plans, it usually requires an additional cash injection – because you need to spend money to make money!
You might be a very capable business owner, but that doesn’t mean you have a head for financial management. Hire the resources or outsource the requirements so you can keep tighter control of spending, use business credit wisely, reduce costs and save money where possible. With the help of a business accountant or financial advisor you can also assess how to reallocate resources so it won’t impact your core business operations or put together a financial plan to secure additional funding from an outside investor.
(Read more: Financial terms you simply must know and understand)
3. A growing workforce
Most businesses start small, with just one or two people who take on all the responsibilities, from writing the business strategy to coming up with a name for the new company. As the business grows, enlarging the workforce becomes a necessity. Hiring new staff members takes the pressure off increased workloads, while these additional workers also bring a range of skills that your business needs to evolve. But having a larger, more diverse workforce introduces different challenges, like more complex HR admin and increasingly disengaged employees.
To better manage the demands of your expanding workforce ensure that you have an effective HR management system in place to streamline HR processes, and increase your internal communication, focusing on company culture. Develop a comprehensive onboarding process for new hires and get the basics right by providing a good work-life balance, suitable benefits and competitive pay.
4. New compliance responsibilities
As your company grows in size, so too do your obligations. From the Protection of Personal Information (POPI) Act to the Compensation for Occupational Injuries and Diseases (COID) Act, with a larger workforce there will be additional rules and regulations to abide by that you may previously have been exempt from.
Documents, policies and procedures – it can feel overwhelming to stay on top of your day-to-day compliance tasks. Investing in the right tools, systems and resources will enable you to better manage more people and a larger volume of information, while ensuring your business is compliant with all the necessary regulations.
There are numerous benefits to outsourcing the administration of such tasks to a reliable service provider. Not only do you reduce the possibility of paying large fines for non-compliance, but you develop a clear standard for how your business operates and you reinforce to your employees that your business is professionally run.
Expansion can lead to exciting opportunities for your business and your employees, but you need to be prepared and plan ahead. Overcome these obstacles and watch your people grow and your business thrive.
