Growing your business is an important part of running it – perhaps the most important part. The story of all businesses is about growth to some degree, whether that’s growth from the kernel of an idea and a few early customers to stable trading in a single location, or the growth from a garage in Albuquerque to what amounts to ongoing world domination.
Whatever future you see for your business, growth must be part of it to some degree, but that means you also have to appreciate the risks. Every opportunity for growth comes with its pitfalls, and it’s those we’re taking a look at today.
One of the most important assets your business has, if not the most important one is your brand. Your brand is the identity consumers construct for your business in order to relate to it on a personal level – it’s hard to feel a level of personal affection for the legal documents that define your business, but the ‘personality’ it has is something customers can latch on to, recommend and feel loyalty to.
Growth can supercharge your brand, and allow you to reach a much wider audience than before, but it can also confuse your brand.
Your brand isn’t something you can directly control. While you can hire design agencies to create logos and colour schemes, and ensure those are reflected in your store and website, your brand is made up of what your customer feel about them – and about a hundred other things, from the manner of the person who helps them in the shop to where and how they see your adverts.
Growing too quickly can lead to decisions that compromise your brand, whether it’s stock to your inventory that doesn’t meet your previous standards or doesn’t gel with your other stock to tell a coherent story or having to hire staff without fully training them. A brand that is damaged or simply muddled by poor decisions around growth may never recover.
Any attempt to grow your business is attended by financial risks. However you fund it, there are different pitfalls to avoid. Dipping into your business’ own cash reserves can leave you short of money for other necessary expenses like repairs or purchasing new stock. Taking loans means you’re at the mercy of a repayment schedule that can’t be adjusted if your new venture takes longer than projected to start paying its way, and seeking investment means giving your investors influence – maybe too much influence – over your business.
Rigorous financial checks over the costing of your proposed expansion and the profitability of your existing business can help to limit some of this risk, or at least help you make properly informed decisions about it.