Starting a business is both exciting and overwhelming. Although you’re optimistic for your new company, you may also feel nervous, especially since many startups fail within the first five years of their operations. One of the most common reasons for startup failure stems from the inability to handle rapid growth in the first few years of business. Because new businesses aren’t sure how to handle this growth, many stretch too far or reduce their operations too much, which ultimately leads to problems. To prevent these issues, businesses need to plan expansions carefully.
Preparing for expansion
The most important thing to remember when preparing for expansion is to avoid overextending your resources, whether they’re financial, structural or human. If you run out of resources, you risk business failure. Expanding your operations without overextending these resources requires a well-defined plan, as well as the appropriate expansion tools and processes.
What to consider when your business grows
- Customer service and support: Your customers are the lifeblood of your company. Without them, your business will surely fail. As your business begins to expand, will you still be able to put your customers first, or will administrative tasks prevent you from doing so? If the size your current staff won’t allow you to continue excellent customer service during expansion, consider hiring more personnel.
- Scalable processes: A scalable process is one that you can easily expand or downsize to meet your current demand levels. When a process isn’t scalable and the business grows larger, the process may become unmanageable. In the early stages of your business, make all of your most important business processes as scalable as possible to prevent future problems.
- Infrastructure: Gaining more customers and increasing sales is the goal of business expansion. However, increased sales leads to other types of growth, such as greater website traffic and more customer data to store in your file system. Be sure that your business’s infrastructure is prepared to handle these increased demands. For example, you can prepare for greater amounts of customer data by investing in cloud block storage and other types of advanced data management services.
- Vendors: As your business expands, rely on your vendors more than ever before. Be sure that all of the vendors you work with will be able to handle your needs during and after expansion. Vendors to consider include craftspeople, distributors, manufacturers and anyone else you depend on to help your business run smoothly.
- Demand: When a business grows, demand can sometimes get out of control, especially if you offer promotional prices and a large variety of products. Although increased demand is usually a good thing, it can be problematic for your company if it becomes too much to handle. However, you can easily resolve the problem by adjusting your prices or narrowing your focus to a smaller niche of consumers.
Although some startups may fail during expansion, yours doesn’t have to be one of them. By following these tips and planning carefully, you can meet the demands of a growing business without overextending your resources.
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