By Jackie Zimmermann
Your restaurant is hoppin', your clothing store is a mega hit, your consulting business has you booked through 2017 -- whatever your venture, it's easy to get wrapped up in the success of your small business. But grow too fast, and you could find yourself adrift in a sea of burned-out employees, weak cash flow and missed orders.
But the most common side effect of hyper growth, says small-business growth expert Evan Horowitz, is a personal one.
"People feel exhausted, like the business has taken over their lives," says Horowitz, whose consulting practice is based in New York. "I find most entrepreneurs start a business because they want to have a better life, more flexibility, more control of their schedule; and people who grow too fast feel like they are run by their business."
Growth is a good problem to have, but it comes with its own set of struggles. Here are some ways to avoid common pitfalls as your business starts to boom.
1. Hire people to help with finances
With the help of a working capital loan or by saving your pennies, you've accumulated enough funding to expand your business. But as your business has grown, your finances have become more complicated, making it easier to lose track of funds and harder to notice negative trends such as dwindling cash flow.
"Definitely get help," Horowitz says. Rely on an accountant or bookkeeper you trust, but make sure to check in regularly so you understand how your company's growth is affecting its bottom line.
2. Communicate with employees
Although growing your business may be a high priority, make sure to consider the strain it puts on your employees. As you grow, you'll find yourself adjusting your labor needs. At one point, you may have too much business and not enough employees, but after a hiring burst you may have too many employees and not enough business. That ebb and flow is normal, Horowitz says. Your employees, on the other hand, may feel like they're stuck in a game of tug of war. When it comes to dealing with disgruntled workers, make sure they understand your end goal.
"Often there's a communication gap," Horowitz says. By taking the time to explain your staffing plan and your growth plan, you can help reassure stressed employees that they're part of a bigger picture.
3. Prepare for changing inventory demands
If you're in the retail business, you know the importance of having a well-stocked store. As you grow, you not only have to secure financing to boost inventory so you can meet increased demand, but you'll also need to make sure your vendors are prepared for more orders.
Since many inventory deals are done far in advance, it's important to reach out to vendors as soon as you can if you are expecting a boost in business. You might still have to put up some out-of-stock signs, but planning ahead can help to ensure you're meeting customer expectations.
4. Keep an eye on accounts receivable
While monitoring your finances, be sure to stay on top of the money others owe you. If you're waiting on payments, it's easy to dip into your cash accounts, making it harder to stay afloat in the long run. In a pinch, certain types of businesses can consider financing the gap using invoice financing, though that can be costly. Careful monitoring of your accounts receivable can help you avoid going into debt to cover your expenses.
5. Listen to customers and adapt
Failure to grapple with your company's growing pains could wind up causing pain to your customers -- cranky employees, empty shelves and other hyper-growth fallout will send them into the arms of your competitors. You'll need to monitor their moods and tweak accordingly to make sure they are getting the best experience your company can offer.
There may be a silver lining, however, if and when some customers become rankled. This could be the perfect time to switch up your customer base. It may seem counterintuitive to phase out potential sales, but restructuring your prices or turning down projects can help you move from consumers unwilling to spend toward a more profitable clientele, while also balancing your workload, Horowitz says.
"When you create huge demand," he says, "you allow yourself to be more choosy."
Jackie Zimmermann is a staff writer at NerdWallet, a personal finance website. Email: jzimmermann@nerdwallet.com. Twitter: @jackie_zm
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