When people start or acquire businesses, the goal is typically how to develop their company into a thriving organization that generates enough revenue to support its owner and possibly multiple employees. A company that founders instead of thriving can be difficult to manage. People may spend years building a business with little revenue and limited personal income.
Entrepreneurs and investors also have to consider the possibility of the business becoming successful relatively quickly. The business planning and development stage generally needs to include a carefully developed plan to address organizational expansion if the business proves successful. If business owners don’t create plans to manage growth, they may find that their company’s success could eventually lead to its downfall.
Growth can cause many challenges
All it takes is one influencer endorsement or viral social media post for orders to come flooding in at an unprecedented rate. A small business may not have the infrastructure necessary to keep up with the demand for the goods it offers online.
Small businesses can sometimes end up dealing with backorders that take weeks to address. Delays in order fulfillment can lead to reputation damage and canceled orders. Companies may receive bad reviews and may have issues with payment processing services in such scenarios.
However, trying to rapidly scale up operations in response to organizational success can be equally devastating. Taking on new employees, buying new equipment and expanding to new facilities can overextend the company if it cannot sustain the level of demand it suddenly experiences.
How businesses plan for growth
There are several ways to structure a company to allow for sustainable growth. Limiting sales through the website and taking pre-orders when the company goes beyond what it can readily fulfill can help the business prevent immediate overextension.
Having a financial plan in place for when the company might expand to a second facility and how to cover those expenses can also be important. The function of the business and the resources available to the owner influence the best way to plan for the company’s growth and expansion. Owners need to be ready to grow or may end up at risk due to growing pains.
Establishing and adhering to business plans that make growth sustainable can be as important as creating a basic plan for the business initially. Entrepreneurs who recognize that growth can be as dangerous as it is beneficial are in the best position to develop successful and sustainable organizations.