3 Ways for Small Businesses to Survive Rapid Growth
According to Harvard Business Review, companies move through five basic stages of growth from startup to mature business. Every business starts at step one: start up. But not every business makes it to the level that familiar brand names like Microsoft and Apple occupy.
In fact, 92% of high growth tech startups fail before they reach their third birthday. For small businesses more generally, the numbers are better, but still worrying for hopeful entrepreneurs. According to the Small Business Association, only half of businesses started today will still be operating five years from now.
For tech companies in particular, what causes failure is often not the lack of growth, but the failure to manage rapid growth in the right way.
In the excitement to build new products, grow business, and add new talent to teams, too many businesses lose sight of the planning and organizational strategies they need to keep the business healthy.
We’re moving into a phase of rapid growth here at SurveyGizmo, so we’re sharing the strategies that are working for us.
Get to Work… On Your Org Chart
Predicting the future isn’t easy, but when it comes to planning for your organization’s successful growth spurt, a little foresight will save a lot of headaches – and possible jobs.
For a leadership team that is used to doing everything themselves, it’s time to take a deep breath and delegate new responsibilities to existing employees and, if necessary, new hires. Choose people you trust and establish clear expectations around what kinds of tasks fall under whose authority. Make sure that every single employee, from the intern to the director, knows who to go to with which questions.
This can be a challenge for small companies, particularly those that have relied on a more flat, less hierarchical structure for managing employees. As you grow, you’ll have to add more levels and additional structure within the organization so that management remains efficient.
When making broad, organization-wide changes, communication and transparency are key. By communicating well and often with your employees, you ensure that everyone is on board.
You want to grow your business, and you’re growing it fast. There are bound to be a lot of changes, and with good communication, your employees know what to do and who to go to for information and resources.
All of this change can make it difficult for the original leadership team to know what’s really happening in their company or make sure that employees are happy and receiving the resources and guidance they need to succeed. For a human resources team that’s likely busy recruiting and vetting new talent, surveys are an excellent way to stay on top of what employees really think and need. Check our some of our templates for common HR survey types to get an idea of what will work for your growing team.
Stay Focused on Product Quality
While pushing to move faster and faster, do not let the quality of your product slide.
This may seem obvious. You built your company’s success so far on the quality of your product or service. Of course, you would never let it slip!
For most startups that fail during a rapid growth phase, loss of quality is one of the major factors contributing to their decline. Because so much is changing so quickly, from internal structure to the product roadmap itself, a company’s QA system can easily become overloaded.
Growing companies never let quality slip on purpose. But when QA systems are understaffed, underdeveloped, and overworked, an increase in bugs and defects is inevitable. Just as a company’s structure needs to adapt to be able to flex and accommodate growth, so too does a company’s QA process. Make sure that you have the processes, systems, resources, and manpower in place to help QA keep up with demand.
When you make big changes to your products, there is a good chance not all of your customers will be as on board or as excited as you are. Let your customers know why you’re making the changes you’re making. Communicate clearly, honestly, and in advance, so no one is caught off guard. Many of them will understand and adapt their own expectations to better align with what your growing product can provide.
Customer service surveys that measure stats like NPS, CSAT, and SUS are a great way to stay connected to the customer experience.
Budget With an Eye to Profit, Not Revenue
As a business enters a rapid growth phase, the money may start rolling in, too. But revenue can be a misleading measure of success when so much of a growing company’s budget is going to the logistics of managing a new workforce and expanding the product.
High revenue can be a mask for a sick company when leadership focuses all of their attention on revenue, and not enough attention on profit.
All of the work a company does to prepare for growth – like adding new positions, personnel, and investing in product development – increases costs. Increased revenue is good, but increased profit is better.
Resist the urge to bask in the shade of all of the money coming into you and your company. Make sure that your bottom line is really in the clear.
Tackle Growth Wisely and Enjoy Success
If 92% of high growth startups and half of small businesses fail within the first few years, that means 8% and 50% succeed. While the process will be difficult, success is possible by planning ahead, putting the right processes in place, and ensuring that you’re keeping an eye on the true success metric – namely, profit, not revenue.
Speaking of growth, there’s a really good change we’re hiring. Take a look at our open positions.