Profit margins.


22nd June, 2023

The dangers of unexpected business growth and how to manage it

Research shows that instant-success companies that experience unexpected business growth have a much higher chance of failing than their slow-growing counterparts.

According to a study by Inc. Magazine, approximately two-thirds of the fastest-growing organisations fail. 

This happens because they miss the opportunity to do one essential thing: become self-sustainable.

With that in mind, let’s discuss the dangers of unexpected business growth and how to handle rapid success.

Strategic growth planning for businesses, dealing with unexpected business growth

1. Increased financial strain

Unexpected business growth brings a sudden increase in operational costs — which can lead to a cash flow crisis. 

On top of that, a fast-growing company will have to expand its workforce to keep up with demand.

And this entails additional investment. There’s the recruitment process, training and onboarding, equipment, etc. Also, many entrepreneurs think they need to pour all their profits back into the business, which is a financial risk that can lead to devastating outcomes.

These steps can help you handle problems caused by increased financial strain:

Ensure a good overview of your business’s financial situation. 

You can achieve this by using a finance software solution like MYOB.

Look for ways to minimise operational costs. 

Consider reducing inventory and outsourcing shipping and handling. You can even try tweaking your business model, like limiting certain product purchases to pre-orders and scheduled drops only.

Cut costs wherever possible. 

If you’re renting an office, for example, could you switch to a remote work model to cut costs? 

Consult a financial advisor to make sure you invest your profits wisely. 

For example, consider investing in dividend-yielding stocks instead of pouring the money back into the company. 

Company culture. dealing with unexpected business growth

2. Company culture suffers

Rapid and unexpected business growth will inevitably affect the inner workings of a company. And if management isn’t prepared to handle the changes, it can harm company culture. 

Typical risks include new hires not fitting in and existing employees becoming stressed or overworked.

Plus, if your management team struggles to keep up with an expanded workforce and operations, it’s easy to lose sight of the key values that drive your brand identity.

So to prevent growth from negatively impacting your company culture, take the following steps: 

Develop sustainable managerial practices. 

For starters, make sure to integrate new hires well. As the number of tasks grows, carefully assign them to make sure that the workload is appropriately distributed and that work is assigned to the right people.

Invest in employee well-being. 

Do your best to meet common employee needs; so that might mean adopting a flexible or hybrid work model and organising affordable flights for team retreats.

Consider offering perks like career development opportunities. Conduct casual team meetings to learn how your company can contribute to your employees’ well-being. 

Prioritise your organisation’s values. 

Strive to communicate your company values clearly and consistently to your staff and customers.

Let your values be the driving force behind the decisions you make for your brand, and use them to motivate your employees. 

And it’s not just your employees that can be affected by burnout as a result of fast growth and deteriorated company culture.

Entrepreneurs are especially vulnerable to burnout, so let’s talk about that. 

3. Entrepreneurial burnout

In 2022, 42% of entrepreneurs reported feeling burned out; and this is the result of two major factors. 

Firstly, entrepreneurs often bear the full burden of making a business succeed. 

Being less 'hands on' with work, dealing with unexpected business growth

Secondly, they often work long hours and don’t take vacations — even risking their physical and emotional well-being as they attempt to grow their business. 

In addition, make sure you’re setting yourself, your staff, and your business up for success as you double down on new opportunities, take the following steps:

Make your company less dependent on your contribution. 

Hire reliable, trustworthy people whom you can delegate to, and learn to step back.

Take better care of yourself. 

Also make sure you’re getting enough sleep on a good mattress, do your best to eat healthy, nutritious food, take time off, and get at least 30 minutes of exercise daily. So try to spend some time outside relaxing and enjoying yourself.

Surround yourself with people who give you strength. 

Spend more time with friends and family. Also, it helps to share your experiences with like-minded entrepreneurs who understand leadership challenges. 

Find a good therapist and talk it out in weekly sessions. 

A professional therapist can help you vent it all out constructively and develop a more sustainable way of working.

Find your “thing” outside of work. 

Whether it’s a hobby, volunteering, or joining a fitness group, it’s essential to have something outside of work that gives you a sense of fulfilment. 

4. Decreased customer satisfaction

A decline in product quality, customer service, or customer experience is a common risk of unsustainable business growth, and it leads to dissatisfied customers and decreases customer retention rates

Here are some strategies to help you overcome this major, all-too-common challenge:

Expand customer support teams. 

To do this successfully, consider outsourcing some tasks or adopting AI solutions

Prioritise customer experience and high retention rates. 

Have your support team keep a finger on the pulse of customer satisfaction. 

Customer complaint dealing with unexpected business growth

Make substantial product improvements.

Product development can prevent existing customers from switching to competitors and buy you time to improve customer experience.

Invest in content marketing aimed at existing users. 

Create educational resources to help your customers get the most out of your products, and this will help reduce churn and develop loyalty.

Responding successfully to unexpected business growth 

Sudden growth can sound like a dream come true to inexperienced entrepreneurs. But navigating this time poorly can eventually bury your business.

Fortunately, there are plenty of measures you can take to lead your company through this challenging period.

Follow the strategies and tips we’ve given, and you won’t have to worry about your company becoming a victim of its own success.