So you've decided to grow your business. You might already be thinking about best practices to avoid common pitfalls when scaling. But this doesn't mean that your business will be immune to challenges.
The best strategy for growing businesses is to be aware of common problems so you can prevent them or fix them fast.
7 Challenges for Growing Businesses
1. Your earliest employees are unhappy.
The Problem: While working for a growing business sounds good in theory, some of your earliest employees might start to show signs they’re unhappy. Why do things have to change? Why can't we all sit around the same meeting table anymore? Why can't I chat with the CEO whenever I need to?
How to Avoid It: If your longest-standing employees are unhappy, your team culture has likely changed and they would like things to remain the same. This is hard to avoid completely, but there are some things you should keep in mind.
Pinpoint what is important to your team culture — although this will change with time, there will be some aspects you want to protect as you grow. Also, make efforts to keep the same levels of transparency and communication you've always had.
How to Fix It: Increase your business's transparency and communication with employees as you grow. But also realize that not every employee is right for every stage of your business's journey. Some people prefer small startup teams, others prefer corporate and enterprise environments. Do what you can, but understand if it's time for some early employees to move on.
2. You've outgrown your tools.
The Problem: The tools you chose when your business was just starting out don't cut it anymore. You're running into problems with your apps, maxing out plan limits, and you know you need to make some changes.
How to Avoid It: Take a good look at your tech stack before intentionally scaling up your business. Will your most important tools (including your CRM, email marketing provider, and accounting software) offer what you need as you grow? Will you be able to upgrade your plan, or is the only option switching to another provider? Save time and money in the long run by making these decisions early on.
How to Fix It: Take time to look at your tools and audit what needs to go, change, or be added. We've compiled our recommendations of the best SaaS tools to get you started.
3. You've hired too fast.
The Problem: With budget in the bank, you've done what many growing businesses do: increase your team size. But a few months down the line, you might be thinking you've hired too fast. Your cash flow might be in trouble, productivity might be dwindling while new employees are trained up, or your team culture might be suffering.
How to Avoid It: Hiring too fast is one of the biggest business expansion problems — and it's one you really want to avoid instead of fixing. Don't grow your team more than is truly necessary and validate every addition to the team.
Remember to learn from other startups’ mistakes and avoid over-aggressive growth choices and risk appetites. You can also follow our guide to scaling your small business successfully.
How to Fix It: If you've hired too fast and you need to make some tough decisions, don't delay making them but do it with heart and empathy. Be transparent about what went wrong.
Buffer opened up about the most difficult decision for its business so far: making 10 layoffs and saying goodbye to 11% of the team after it started to burn cash instead of being cash flow positive.
Buffer attributed this mistake to over-aggressive growth choices and moving into a house it couldn't afford, said CEO, Joel Gascoigne:
"We thought we were being mindful about balancing the pace of our hiring with our revenue growth. We weren’t. One of our advisors gave us an apt metaphor for what happened: We moved into a house that we couldn’t afford with our monthly paycheck."
As well as making 10 difficult layoffs, Buffer got its cash flow back in the green by cutting founder salaries by 40%, discontinuing two employee perks, cutting sponsorship budget, and canceling a team retreat. It ripped the band-aid off quickly and are very conscious of avoiding similar mistakes.
4. Budget has doubled but not your results.
The Problem: We've doubled the team, why haven't we doubled the results? We've multiplied our spending, why don't we have more customers? Whether it's you or your investors asking these questions, it can be difficult to find answers.
How to Avoid It: Scale slowly. Make gradual improvements and investments and keep your finger on the pulse of your business's core financial metrics.
Following a slower growth philosophy and maintaining nimble teams can keep your business more productive than making large hiring rounds that disrupt your team's flow and require time-consuming onboarding.
How to Fix It: Slow down and look at what's gone wrong. Has productivity gone down? Are you burning way too much cash? Have you hired the wrong people? Or were you just too optimistic?
Get clear on what the real issue is and decide how best to pivot your growth strategy.
5. You're spending too much time on coordination instead of actual work.
The Problem: Hiring people should free up your time, right? Eventually, yes... but usually not at first. Onboarding new employees is one of the most time-consuming tasks for any business.
How to Avoid It: This is another business growth problem that's best avoided by growing cautiously. By hiring more gradually, you and your team will have more time and energy for onboarding new team members.
How to Fix It: If you or your business's management team are spending every minute managing people instead of focusing on your "real work," look at your processes.
Identify where the inefficiencies are and understand what needs to change in your strategy, leadership team, and business tools. What are you wasting time on?
In an interview with First Round Review, Bob Sutton, organizational behavior expert at Stanford’s School of Engineering, shares that scaling is often about less, not more:
“Scaling is actually a problem of less... There are lots of things that used to work that don’t work anymore, so you have to get rid of them. There are probably a bunch of things you’ve always done that slowed you down without you realizing it.”
6. Departments are becoming less aligned.
The Problem: You once sat together around a table, but now your team has multiplied. Your sales team has their own meetings while marketers talk amongst themselves. And, data silos have started to set in.
How to Avoid It: Scaling a business successfully requires excellent communication and collaboration. Keep your departments working closely together, maintain individual accountability for overall business goals rather than just departmental numbers, and make sure you synchronize your tools transparently.
How to Fix It: No surprises here; you solve unaligned teams by increasing alignment. This means more face-to-face time, collaborative tech tools, and cross-departmental projects. Also, make sure your data is in sync to fix silos.
7. Contact management is getting messy.
The Problem: As your business is using more apps than before, the number of contacts in your database is multiplying fast. And, they're not even close to being organized.
How to Avoid It: The most effective way to prevent and fix messy contact management is with a two-way data syncing tool. By setting it up, you can quickly align contacts across all of the right apps, with exactly the right data and segmentation synced between tools.
How to Fix It: It's never too late to introduce two-way syncing and restore order to contact management. You can also use this as an opportunity to do a contact clean-up and get a clearer picture of your leads and customers.