How fast is your business growing?
Contrary to the popular beliefs, starting a new business its not the most difficult thing. It’s more important and difficult what you do next. Of course, if you already started a business probably you worked hard to find that excellent business idea to ensure your success, but as soon as your business starts it will have a life of it’s own. Even if you have carefully planned everything, there is no saying what direction it will take – maybe you will end up doing something completely different because if you are smart enough you will steer your business to the most profitable activities.
The direction and what you will end up doing it’s not really important after all. Most importantly is how fast it’s going one way or another. Most people start a business to fulfill a very personal desire. So how fast is good, is very fast good or bad?
It can either grow too fast either too slow and neither are good. Let’s see why.
Going too slow
Usually bootstrapped companies have the tendency to grow slower. Lack of investment money means you can’t go out and rent a huge office space and hire the second day. Hardware, know-how and man power might be missing. Marketing budget is scarce so you can’t get a lot of customers. Or simply you can’t expand production.
Besides the obvious risks like your competition going faster and killing your market, the most dangerous risk (mostly because it’s hidden) is … loosing interest. If for you, the entrepreneur, it takes too long to meet your targets (whatever they are) you will miss the essential force to make things happen and eventually your interest will fade away. If you plan to have 20 employees in the next 2 years (because this makes everything worthwhile for you) and you only have 2, that means a painfully death of your business. Painfully not because it’s not profitable or anything, but because it doesn’t serve your desires.
Going too fast
Going too fast usually happens when you find a good niche, a big customer or a growing market. Going fast will get your desires fulfilled soon, so what’s wrong with that? It can be bad in more ways. First if you get what you want too fast, you might lose interest after. Maybe if you get that million dollars in the bank you won’t feel the desire to keep running your business, right?
On another layer, going fast can be a sign of un-natural growth. Usually is related to getting a big customer that brings you good growing business. The bad things happen when you need to expand so quickly that you need to get expensive finance, hire not so efficient people, or simply spend too much as you feel money are coming your way fast, and then, for a reason or another that big customer goes away. Or simply the market is shrinking. Guess what, now you have way too many employees, too much office space or too much production. This spells disaster.
To make things even worse, there is no saying when you go too fast or too slow. Usually you realise this when something goes wrong. So how fast is your business growing?