The problems that business owners face, Everything that matures goes through a series of growing pains and businesses that are scaling up are not an exception.
Expanding operations, products, and customer base can differentiate between success and failure for new ventures. Building a more prominent company requires hiring more workers, and bringing staff from a dozen to 50 could cause chaos. The processes can fail and cause bottlenecks, the company’s culture could change, and leaders may need help managing daily tasks. This can confuse or demoralize owners, investors, early employees, and customers who undergo these changes–mainly when companies need to prepare to leap into growth-stage status.
To closely study this issue, Ruby identified the ten biggest problems entrepreneurs face as they expand and suggested strategies to address or prepare for those issues. The study draws upon current news coverage, small business resources, and experts’ insights. Such as the interview of Karin D. O’Connor, a professor of strategic management of strategy at Northwestern University and the executive director of the Heizer Center for Private Equity and Venture Capital.
At its most fundamental level, a business can only thrive if it can attract customers. When a company expands its operations, its customer base must be able to support the growth. The newer companies typically gain new customers via networks and referrals. Therefore, it is crucial to pay attention to current and prospective customers’ requirements and ensure they are pleased.
“In the early days, you’re looking at engagement metrics,” said O’Connor, an early-stage investor who has been on boards for various companies that have grown in the last 25 years. “So once software has been implemented, for example, are people using it? Are they in there every day?”
Other methods for companies to draw more customers include:
- Offering new customers discounts.
- Loyalty programs.
- Partnerships with larger companies.
- Maintaining a top-quality website with high-quality SEO.
Expanding a business’s operations to several locations is relatively easy, dependent on the experience of the entrepreneur. However, the process could be more complex when they cross state or city lines. Branching an enterprise to new locales could be like opening the doors of an entirely new business.
Taxes and rules on permits, licenses, zoning, and permits are often different. Business owners who are growing should contact the state office and search websites for a complete idea of the process the expansion process will entail before proceeding.
According to O’Connor, certain companies are more independent of geographic locations, particularly in the tech area. However, they face challenges when expanding across different industries if they have difficulty expanding across states, cities, and even countries. Entry into a new field requires substantial market research, which may include tests and interviews, to ensure that the product is suitable for the latest segment of consumers.
“Let’s say you sell to franchise restaurants, and you think that gas stations would be another good target,” O’Connor added. “You need to go in and understand those buyers and not just assume that you can just launch.”
If you consider moving into a different vertical, O’Connor noted a few crucial questions: “Do they have the same problem? Is this top of their priority list the same way it is with your existing customers?”
One of the growing biggest concerns for companies is the need to increase staff. It’s a delicate balance between how much work is coming in, the number of employees required to finish it, and what abilities they need to be effective.
The quality of your recruits affects the entire process, from how efficient the business is to the culture it has. In the article for Forbes, a renowned expert in recruiting, also known as “Recruit Rockstars,” author Jeff Hyman discusses the best ways to find the best people. Hyman emphasizes the importance of seeking potential candidates through networks instead of using job boards to hire applicants, requiring them to create work samples and an atmosphere that people would like to be part of.
A meticulous process for recruiting takes more time and effort, but it pays off by extending the tenure and enhancing quality work, Hyman says.
Retaining the culture of the company
Attracting the right employees can be a significant factor in keeping and improving the culture of a rapidly growing business. Once new employees have been hired, companies need to keep putting in efforts to maintain an environment that is positive. This means the development of a complete training and integration plan that is focused on creating a culture.
Companies need to be clear about their goals with examples that show what it means to live the value. For instance, “consistency” means meeting deadlines and ensuring that all assignments are held to the same standards “collaboration” means allowing everyone to contribute, speak and be a leader. Continuously gathering feedback from employees will also ensure that the culture doesn’t get lost in the chaos.
Finding employees and building an item requires money. Sometimes, quite a bit. If the founder does not have enough money to begin putting towards establishing their business, it can be not easy to find alternative sources of capital. Most investors and lenders require credit scores and business records that a growing company might still need to get.
There are many options for entrepreneurs to access funds via the Small Business Administration, which offers loans for long-term for equipment, property, and other starting cost. Certain private investment companies are also partnered with SBA to provide government-backed loans for small-scale business owners to boost local economies.
Pursuing venture capital
Venture capital is a different way small businesses can gain access to capital to grow. However, O’Connor said that most companies need to have the right skills.
“Venture investors are looking for companies that have the potential to grow very large and companies that are meant to be exited within a reasonable period,” she explained. “The founder needs to be on board with that. If the founder is seeking to build a business that they’re going to run for decades, a legacy business, a family business–that is great. Still, they’re not going to want to capitalize it with venture capital or spend time trying to do that.”
Investment banks are seeking market-ready products. They want to ensure that whatever product or service a business creates is something that consumers would like and will spend money on, has an extensive reach, and offers some advantage over its potential rivals. Founders must have qualitative and quantitative data to prove their theories when seeking investment.
“Whether you’re raising money from investors or it’s your own money that’s coming in, you need to be focused on making every dollar work as hard as possible,” O’Connor stated. “Understand your expectations for those dollars and how you can stretch them. There isn’t an endless pile of capital out there that’s available to grow businesses.”
Recognition of your name can go a great way to gaining investors and customers. Press coverage is an effective method of achieving that fame. However, small businesses getting noticed by news websites can be challenging.
Growing companies can increase their odds of receiving coverage by reaching out locally and to industry-related media when significant events take place in their businesses, including hiring drives, funding rounds, and leadership changes. When these events are shortly, even before they are announced publicly, company executives should be ready to talk about them with journalists.
Entrepreneurs can make themselves known as experts in their field by establishing a robust social media presence, signing up with websites like Qwoted or PR Newswire, and offering their opinions to journalists when an issue is mentioned during the regular news cycle.
Making the right choices for technologies and processes
Effective processes aid a business’s performance. As companies expand the size of their operation and strategy, they need to determine what tasks they will handle on their own and what tasks to outsource.
“The infrastructure piece shouldn’t suck up a lot of time,” O’Connor stated. “Too many companies are trying to reinvent the wheel. When there’s already Slack, why would we build out a whole communication system on our own? Particularly with technology, we’re developing helpful tools every day.”
From customer service to communications Utilizing existing processes and infrastructure tools can let employees focus their time on selling, coaching, marketing, and designing the product. In areas with many companies competing in the same field, such as instant messaging, choosing which tools to choose from can be challenging. O’Connor says that speaking to others who’ve used specific tools helps her identify options for the businesses she collaborates with. Bringing together owners, founders, and CEOs to talk about common issues can reveal the methods and tools that are most effective for different scenarios.
When a business employs only a handful of employees, the founders usually are involved in every aspect. However, as the company grows, the founders need help to maintain a similar level of supervision.
“This is hard psychologically for some people because they want to have that control, and that makes them comfortable,” O’Connor stated. “But it’s also hard from a process perspective.”
Although there’s a willingness to discuss decision-making with others, it can be challenging to delegate tasks effectively, establish goals, and monitor the results effectively, O’Connor said. In addition, attracting and keeping employees with the right capabilities is essential in delegating work and ensuring that the work will be performed correctly. The effective delegation also requires setting clearly defined expectations and goals, delegating specific tasks to employees previously a founders’ responsibility, and ensuring ongoing training and development to employees to improve their positions.
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