We are over half-way through 2023, and at the start of the year many of you will have set goals to scale your business. As we enter mid-summer, it’s a good opportunity to reflect and examine whether those growth plans have been successful, or were they just a pipe dream?
Let us share some sobering statistics: Research has revealed 20% of small businesses fail within their first year; 30% fail within their second year; 50% fail after five years. On their tenth year, only 30% business owners make it.
When it comes to scaling your business, it isn’t always as straight forward as it sounds, and to prepare for growth, you must first understand the challenges that can prevent many businesses from scaling. From here you can put measures in place to help overcome these challenges and prevent them from sabotaging your growth plans.
Of course, every business is unique, and therefore the challenges businesses face will vary, and the obstacles faced will also depend upon the stage of growth your business is at. However, in this next section, we are going to explore some of the most common issues that businesses might come across when growing.
One of the biggest reasons start-ups fail is because they attempt to scale too early, before the product fit has been determined and when there are sometimes still issues with the product or service that need ironing out. Others attempt to scale without fully understanding who their customers are, or before there is sufficient demand.
Another common problem is that businesses focus upon the product or service they sell but forget about the structure of their business and whether it is equipped to cope with a scale up. What works for a small business might not work so well as the business grows. Do you have the technology and robust systems in place to ensure you can cope? For example, you might go from a couple of hundred customers to a couple of thousand – do you have the functionality to keep these customers satisfied, can you keep on top of their enquiries? Can you handle the increase in orders, can your stock management process cope? Are you keeping up with your invoicing or are you struggling to pay invoices on time? These are all questions you should be asking yourself with regards to the structure of your business.
When it comes to scaling your business, you need the right type of people so don’t be tempted to go for quantity over quality in your recruitment process. It’s important to hire people with the right skillsets and experience needed to scale your business, and people who will compliment your company culture.
It can be easy to ignore little issues that pop up, but ignoring small issues will lead to bigger issues so regardless of how busy you are, always be sure to address niggles as they arise rather than hoping they will sort themselves out.
Tempting as it is, thinking that you can ramp up sales and growth by cutting your prices will only improve short term sales, and in the long term can risk your business by affecting quality and service. To scale up successfully you should focus on the unique values your product offers and deliver a quality product and outstanding customer service.
Businesses at different stages of growth will experience different challenges which can affect their success when it comes to scaling, however we have examined some of the most common challenges above. To prepare for growth it’s important to understand the issues that can arise and some of the common pitfalls businesses make so you can prepare for them and implement strategies to drive your business forward and guarantee long term success.
For more information about how Pegasus Software can help you scale your business, please contact us today to discuss our award-winning business management solutions.
Posted On: July 26, 2023
