Business growing pains are incredibly common, but that doesn’t make them any less painful. The faster you can implement solutions, the better. Here are five signs your business is experiencing growing pains so you can get it back on track.
1. The business sales are still increasing, but profit has plateaued.
Many businesses get trapped in a cycle of growth without profit. Sales go up, but so do overheads - staff wages, office rent, marketing expenses. To an outsider, business is booming. But according to the numbers, it’s just breaking even.
Sales growth for growth’s sake can be a dangerous strategy, unless you know your true costing and pricing position and you’re guaranteed to make incremental profit.
When sales increase but profit stays the same, something needs to change. You want profit to rise as the business expands - or what’s the point in growth?
Increasing profit might be as simple as tweaking the numbers. Could you raise your prices by 2 - 3 per cent, while at the same time decreasing your overheads? Could you find a way to increase the average customer spend and buying frequency?
“Sales growth for growth’s sake can be a dangerous strategy."
Try making one change to your business model at a time and see if it has any impact. If you make too many changes at once, you won’t know what worked. Change, test, review, and repeat until you find a successful formula.
2. Your staff spend a lot of time “putting out fires”.
Do you ever feel like your employees are in permanent ‘panic mode’? Do you have a constant line of people outside your office looking for quick solutions to complex problems? Are your days spent addressing urgent tasks instead of planning ahead?
Mistakes can be a great way to grow––every “fire” offers an opportunity to make a positive change––but only if you have time to adjust and implement solutions. If you’re trapped in a cycle of firefighting without forward planning, you need to find a way to move from being reactive to proactive.
Try to identify the cause of each ‘fire’ and see if any patterns emerge. You may need to hit the brakes on a certain product or service while you adjust or look at launching an updated offering.
3. Ageing technology is not replaced.
Is your business outgrowing its technology? Keeping up with new technology can feel like a full-time job in itself––but it’s worth the effort. Outdated technology can cost your business dearly in time, money, and even customer and employee retention.
Here are some questions to consider:
Does your technology slow down or speed up business processes?
When was the last time you updated your IT systems?
Do employees ever complain about the technology?
Is your customer-facing technology (such as your website or your apps) up to par with competitors?
Does your technology pose any security risk or threats, as seen recently with cyber attacks?
Whether you need to upgrade your CRM system or purchase a suite of new computers, it’s important to audit your technology as your business grows.
4. Your employees do not work as a team.
Do all of your employees understand their role and how it fits in with the business at large? Do they work as a team and support each other in the pursuit of a common goal? Or do they work independently, motivated by their own agenda?
Do all of your employees understand their role and how it fits in with the business at large?
A discordant workforce is a common business growing pain. A strategic internal communications or HR plan can help to iron out any communication kinks and make sure your team is on the same page.
5. The ‘system’ is constantly down.
Every business relies on a system of some kind. For example, your business might rely on point-of-sale software to process customer transactions. Or perhaps your business needs the email and phones working at all times.
If the system is constantly down, it’s a sign that your business is growing faster than the system can keep up. This can frustrate employees and irk customers. Make sure the system is big enough to handle your business so it can grow without pain.
Looking for more tips to increase profit and achieve business growth? Check out our free ebook on info.bellinghamwallace.co.nz/business-growing-pains to discover what strategies you can put in place to take your business to the next level.