5 Pitfalls to Avoid When Growing a Business Too Quickly

It’s exciting to watch your new business grow and grow—but watch out for these dangers that can threaten to bring your enterprise down. The post 5 Pitfalls to Avoid When Growing a Business Too Quickly appeared first on AllBusiness.com The post 5 Pitfalls to Avoid When Growing a Business Too Quickly appeared first on AllBusiness.com. Click for more information about Guest Post.

By Brandon Vallorani

In my early days as an entrepreneur, I repeated phrases like “Expand or Die” and “Go Big or Go Home” around the office. It worked. Since 2012, we’ve made the Inc. 5000 List of America’s Fastest-Growing Companies five years in a row!

To achieve this award for five years is challenging because the bigger you grow your revenue one year, the more revenue you must generate the following year. Thanks to an excellent team, we’ve succeeded in doing so. It’s exciting to focus on growth—especially for a startup.

But while you are admiring the bigger and bigger numbers each quarter, tiny cracks can appear in your foundation that threaten to bring your empire down. There are most certainly growing pains as well—pitfalls that have brought us to the brink of disaster.

Here are five pitfalls to avoid:

It’s easy when a business is young to hire people you know and trust like friends and family. Sometimes as you’re growing, you’ll find yourself hiring anyone and everyone just to keep the work going forward, even if their performance is subpar on entry. After all, recruiting can be time-consuming and expensive.

For many startups, early team members are often handed big titles. Will they be able to live up to the responsibilities their title demands as your business grows? Do they have the experience and/or education necessary to lead when you move from your garage to a corporate office? Did you hire two people for a position that one more qualified person might have been able to handle?

You don’t need the pain and drama of firing people you hired at the beginning. So, be careful what promises you make and seek to recruit qualified people at the start. Also avoid bloating your payroll costs with extra personnel.

A business that is growing quickly can consume its profits for breakfast, and leave nothing for lunch and dinner as it experiences explosive growth. Before you know it, you’ve created a hungry monster that needs cash to make payroll, pay for advertising, and buy more inventory just to keep moving forward. Your amazing business could literally starve to death.

As revenue flows in, it’s tempting to put all of it into achieving the next level. While this is necessary to continue growing your business, make sure you are also keeping cash in reserve to get you through lean seasons.

When a business grows too quickly, many founders lose sight of their original vision. They broaden out so far that their team members forget what the product or service was that built the company in the first place. It’s good to diversify into new areas as long as the core business stays financially healthy and on track. Simultaneously, one can also wade too deep into a particular department that is of more personal interest.

As the company’s chief leader, seek to remain at the thirty-thousand-foot level rather than focus on minute details that can drain your time and energy, keeping you from driving the company’s overall mission forward.

Many startups struggle to find investors and capital, so entrepreneurs often leverage themselves personally to build their businesses. That’s exactly what I did, and I spent the first few years with a mediocre credit score that limited my financial options. I borrowed money to buy inventory and advertising, and then paid it back before any interest was charged. I thought it was smart until I realized that the credit bureaus showed my ratio of debt to available credit as 1 to 1.

To maintain a great credit score, you should only utilize 30% or less of your available credit at any given time. If you don’t separate your personal credit from your business credit, your future ability to borrow money will come to a screeching halt.

Don’t forget why you started your business in the first place. For me, I wanted to earn more money than I could earn working for someone else. But it wasn’t just about the money. Rather, it’s what money could buy: time to travel and enjoy my family.

When a business grows too quickly, it can consume every minute of your day, making you reactive rather than proactive. Even if you do take a vacation, you’ll spend it answering emails and taking phone calls.

Don’t let your business become a runaway train while you race down the tracks trying to catch it. Be the engineer. Maintain a safe and steady speed so that you can stop and refuel when needed. What’s the point if you don’t take some time to reap the rewards of your hard work? Remember to take time for yourself and your family, and remember why you started your business.

Post by: Brandon Vallorani

Brandon Vallorani is a practiced entrepreneur and accomplished CEO. He founded an Inc. 5000 media conglomerate, which has been recognized by the Inc. 5000 List of America’s Fastest-Growing Companies every year since 2012. Brandon has now has shifted his focus to Vallorani Estates, a luxury brand of fresh-roasted coffee, wine, cigars, and olive oil.

Company: Vallorani Estates
Website: www.valloraniestates.com
Connect with me on Twitter and LinkedIn.

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