Avoid These Common Mistakes as Your Business Grows
As a small business, you want to grow into a larger and possibly global firm. While it is natural to want to expand your reach, there are always some mistakes that can happen along the way. As businesses grow from a small shop to a global enterprise, there are growing pains that can happen. While you might not be able to avoid all of the pitfalls, here are a few common expansion mistakes that you should watch out for:
Going Global for All the Wrong Reasons
Running a global business sounds great, but it is certainly not easy. When a small business becomes stagnant in a domestic market, it often looks internationally for new opportunities. While this might be good in some cases, it can certainly lead to some problems. A recent study included 1,100 executives at midsize businesses and 2,487 small business executives. It found that 73 percent of the executive’s were planning on expanding into new markets.
Out of these businesses, about 480 of them had actually expanded. The Economic Intelligence Unit found that 40 percent earned no revenue from their international efforts. About 72 percent of these companies still believe that 11 to 50 percent of their earnings would be from international markets within five years.
Going global can be profitable, but it is not a get-rich-quick scheme. Initially, it can stress your company’s financial situation for years. If you want to expand, you need to be patient and gradually increase your business operations overseas.
Learning About Your Skill and Resource Gaps
No one is able to do everything perfectly. When you first began your startup, you were the entirety of your workforce. As you started to grow, you had to hire people to take on different roles. You knew that you were not good at a particular skill, so you hired someone. Your company operates around the same idea.
As your business grows, there will be resource and skill gaps. Smart entrepreneurs recognize these skill gaps early on so that they can fill the as quickly as possible. If you plan on expanding, it is especially important that you fill skill gaps as quickly as possible.
Not Having a Backup Plan
As you expand, your business will naturally become more complicated. There will be more documents, financial statements, and revenue reports to keep track of. While you could store these on your corporation’s network, you also need to make sure that your network is protected.
Businesses need to invest in a disaster recovery tool to protect their business in an emergency. With the right hardware, your business can be up and running in minutes instead of becoming permanently debilitated.
Not Understanding Your Customer
The customer is key to any business. Unfortunately, small businesses do not always listen to their customers’ wants and needs. You have to understand what type of products and prices your customers are looking for. As your business grows, you can no longer rely on your gut instinct to determine the right decision.
Hiring the Wrong Talent
As your company grows, you naturally need to hire new employees. Many startups make the mistake of hiring inexperienced workers because they have the right degree, but are cheaper than someone with more experience.
While a few young workers is fine, you do not want all of your new workers to be inexperienced. In one survey, half of American executives at overseas companies said that the cost of labor could hurt their international ambitions.
Obviously, labor costs are important, but you cannot afford to cut corners by skipping out on skilled workers. If you’re looking to save money in your company, consider automating some of your more tedious jobs. For example, you could use electronic billing and have more money to hire the experienced employees you need.
Relying on Informal Partnerships
Right now, you might be running your business with a friend or a spouse. You might get along, but it might not be that way forever. Growing a company is stressful. These stresses can hurt your relationship, and many co-founders end up dropping out because of a disagreement. While they might not be a part of the business, they will still expect you to honor a verbal promise. At this moment, you need to get all of your agreements in writing. Otherwise, your forgotten partner may appear when you go public to collect their share.
The same concept is true for all of your business partnerships. If your vendor supplies you through a handshake deal, you need to get the terms in writing. Even if both of you have the best intentions, it is very easy for two people to remember an event or agreement in different terms. Protect yourself and your company by getting all of your agreements ironed out in writing now rather than later.
You Will Continue to Learn
As your business grows, some mistakes are inevitable. Your goal is to learn from the mistakes of other companies and develop your own methods. With enough foresight, you can avoid some of the most common mistakes and focus on building your company.