Why is it dangerous for your company to grow too fast?
Posted: Mon Jan 06, 2025 4:41 am
Is rapid growth synonymous with business success? Not always. Sometimes it involves dangers such as those we discuss in this article.
These are times of pure speed. Absolutely all areas of human life must be optimized to the maximum to function as quickly as possible: finishing as much work as possible in the least amount of time possible, squeezing in time for fun, running from one place to another, looking at a thousand pages of the Internet in two minutes… And, of course, also associating the rapid growth of a company with its success. But things may not be what they seem.
Rapid growth is not always necessarily a good thing. It often involves a whole range of problems that, if not managed properly, can end up having a negative impact on a company. What are these dangers? And what are their possible solutions?
What are the dangers?
Broadly speaking, there are four major dangers that usually go hand in hand with the rapid growth of a company or startup…
Loss of contact with customers. A small business structure usually implies a greater pampering of customers. After all, when there are few customers, the absolute priority is to keep them all happy and maintain constantly open lines of communication through which to satisfy their needs. Rapid growth can mean that, with a reduced team or a new team that is not yet in control of the situation, that preferential treatment with the original customers is lost… And that is an australia number data undesirable situation: gaining new customers to lose old ones is not something that any company can afford.
Bad hires. At the beginning of everything, when a company is just starting out, each new hire is (and should be) a star signing who is expected to contribute his or her bit to the joint venture. But if growth suddenly accelerates, there is probably not enough time to study each case, each CV, each staff acquisition. And this can translate into the fact that, probably, the most suitable people are not hired to accompany the company's growth.
Identifying a higher number of sales with a higher profit. It is clear: logic dictates that an increase in sales must imply a higher profit. And so it is… in almost all cases. So it is absolutely pertinent to analyze all possible cases, because unexpected surprises can suddenly appear. Let us take as an example the fact that, in order to sell a few more products, the supplier forces the purchase of a larger package that can end up getting stuck in the warehouse. Or let us take another case in which, in order to sell just a little more, it is necessary to make an investment in storage infrastructure. The key is to study each case individually.
Complex accounts. This is easier to understand: a larger business structure implies an unavoidable complexity of the financial accounts. At the beginning, when a manageable scale is maintained, it is easy to have an economic overview of a business. But, as soon as it begins to scale up to a larger model, it is easy to lose sight of this overview and, therefore, not notice incipient problems.
What are the possible solutions?
The dangers of accelerated company growth mentioned above may seem scary… But don’t worry, because where there are dangers, there are also possible solutions. Like the ones below.
Planning for growth. Growth is something that should not be left to its own devices, because that freedom will always result in chaos. Every small business should approach growth with a clear and sustainable plan.
Building partnerships. Why approach growth with internal infrastructure when, by creating the appropriate partnerships, outsiders can offer you advice and input on how to do it much more appropriately?
Eliminating middlemen. In a fast-paced growth, middlemen are often a source of more than likely problems… So the best thing to do is to strengthen alliances and reduce middlemen.
These are times of pure speed. Absolutely all areas of human life must be optimized to the maximum to function as quickly as possible: finishing as much work as possible in the least amount of time possible, squeezing in time for fun, running from one place to another, looking at a thousand pages of the Internet in two minutes… And, of course, also associating the rapid growth of a company with its success. But things may not be what they seem.
Rapid growth is not always necessarily a good thing. It often involves a whole range of problems that, if not managed properly, can end up having a negative impact on a company. What are these dangers? And what are their possible solutions?
What are the dangers?
Broadly speaking, there are four major dangers that usually go hand in hand with the rapid growth of a company or startup…
Loss of contact with customers. A small business structure usually implies a greater pampering of customers. After all, when there are few customers, the absolute priority is to keep them all happy and maintain constantly open lines of communication through which to satisfy their needs. Rapid growth can mean that, with a reduced team or a new team that is not yet in control of the situation, that preferential treatment with the original customers is lost… And that is an australia number data undesirable situation: gaining new customers to lose old ones is not something that any company can afford.
Bad hires. At the beginning of everything, when a company is just starting out, each new hire is (and should be) a star signing who is expected to contribute his or her bit to the joint venture. But if growth suddenly accelerates, there is probably not enough time to study each case, each CV, each staff acquisition. And this can translate into the fact that, probably, the most suitable people are not hired to accompany the company's growth.
Identifying a higher number of sales with a higher profit. It is clear: logic dictates that an increase in sales must imply a higher profit. And so it is… in almost all cases. So it is absolutely pertinent to analyze all possible cases, because unexpected surprises can suddenly appear. Let us take as an example the fact that, in order to sell a few more products, the supplier forces the purchase of a larger package that can end up getting stuck in the warehouse. Or let us take another case in which, in order to sell just a little more, it is necessary to make an investment in storage infrastructure. The key is to study each case individually.
Complex accounts. This is easier to understand: a larger business structure implies an unavoidable complexity of the financial accounts. At the beginning, when a manageable scale is maintained, it is easy to have an economic overview of a business. But, as soon as it begins to scale up to a larger model, it is easy to lose sight of this overview and, therefore, not notice incipient problems.
What are the possible solutions?
The dangers of accelerated company growth mentioned above may seem scary… But don’t worry, because where there are dangers, there are also possible solutions. Like the ones below.
Planning for growth. Growth is something that should not be left to its own devices, because that freedom will always result in chaos. Every small business should approach growth with a clear and sustainable plan.
Building partnerships. Why approach growth with internal infrastructure when, by creating the appropriate partnerships, outsiders can offer you advice and input on how to do it much more appropriately?
Eliminating middlemen. In a fast-paced growth, middlemen are often a source of more than likely problems… So the best thing to do is to strengthen alliances and reduce middlemen.