Watching your small business grow is pretty much a dream scenario for any entrepreneur. But growth that happens too fast can also have negative consequences for the business, especially if you’re not prepared to handle it. Limited funds and manpower might result in struggling to keep up with it, or you might end up overestimating the expansion and making costly mistakes.
With that said, this stage of a business’s life cycle doesn’t have to be overwhelming — here are five steps that can help turn that growth into success:
1. Analyze your growth
Conducting a business analysis is a must, whether growth happens by chance or a result of consistent hard work. Doing a SWOT analysis — which stands for strengths, weaknesses, opportunities, and threats — can help you figure out what you’re doing right, as well as the points you can still improve on. This process can also help you understand what gives you an edge over your competition, and identify the ways you can stick to your business’s core values and objectives as you expand.
2. Manage your finances
As more money comes in, the more you need to be diligent about financial management. Now is not the time to get complacent or frivolous with your budget given that growth also means added expenses. Handling finances means staying on top of your revenue, expenses, invoicing, taxes, and debt, among other things. Scaling a business is also a good time to reevaluate or refinance your loans to get a better deal now that your profits are growing. Lenders will consider you as less of a risk given your new projections and will be able to provide better rates for your business loan.
But if your business is growing a lot faster than you expected, consider outsourcing professional financial services like accounting or bookkeeping. This reduces the chances of making errors that might end up hurting you or your business.
3. Update your business structure
Being a solo proprietorship or partnership is the default structure for most entrepreneurs and small businesses. However, growth signals the time to reconsider and update the legal structure of your business, especially if you want to separate the personal from the professional.
A limited liability company (LLC) is your next best option for a small business owner as it grants you legal and tax advantages as with corporations. More specifically, LLCs are taxed directly to the members. The main benefit of an LLC, though, is the protection of the owners from legal ramifications such as debt or lawsuits. The process of forming an LLC is not very complicated and can be done in a few steps with the help of a registered agent in your state. Updating your business structure is an important consideration. This is because as your business grows it will add both a layer of legitimacy and security to you and your business.
4. Build the right team
When recruiting employees for your small business, you first need to evaluate how a new hire will fit into the growth plan for your business. This will help you create a clear job description which is essential to establishing work expectations. Having that clarity from the get-go ensures that no time is wasted on onboarding new employees, which can be a costly and lengthy process. Another option is to hire a professional head-hunter who can bring in the right people for your business. Outsourcing this process can give you more time to focus on other aspects of the business without compromising the quality of your growing team.
5. Prioritize customer service
Neglecting your customers’ experience is a missed opportunity given that consumers trust small businesses more than large companies. To use this to your advantage, you need to continue making customer service a priority primarily by training staff to competently address your clientele’s needs. Make sure to respond to feedback you receive, reward your loyal customers, and provide them with a more personalized experience. Regardless of the size of your business, you want to keep your customers satisfied — they are, after all, the reason behind your growth!