3 Myths About Scaling Up Your Business And What you Can Do To Avoid Them.
This article originally appeared in LinkedIn as “5 Myths About Scaling Up Your Business”. I have re-posted this as a shortened version here.
When it comes to scaling up your business growth, there are many myths which often prevent entrepreneurs and business owners from rapidly scaling up their businesses and below I will debunk 3 of them.
The fact is, thousands of entrepreneurs around the world have developed high growth or Gazelle businesses which have exploded out of the blocks and have done so on a shoe string. They have simply taken the skills they had, the money in their bank account, added their passion and drive to the mixture and got on to explosive growth in their businesses.
For example, JB Global. Started by Jason Bannister in 2002 selling on eBay, JB Global has had astronomical growth over the past 15 years, averaging around 40% year on year and has been recognised by The Sunday Times Fast Track 100 as one of the fastest growing retailers in the UK. Hangerworld has become one of the worlds leading suppliers of clothing care, storage and ironing supplies despite having started as a business selling second hand hangers on eBay and are growing international sales by an average of 62% over the past 2 years from their base in Blackpool. We could mention Gymshark, naughtone, or RHA.
These and so many others have proven explosive growth is not just for tech start ups and those who have massive VC funding and blow this myth wide open. If you have a dream and a passion which fuels that dream, your business can experience explosive growth.
No matter what name you use. High Growth, Explosive Growth or Gazelle Growth. Business Growth is for anyone with a dream, a passion and a plan.
MYTH #2 – Growth Is The Surest And Quickest Way To Solve Cash Flow Problems!
I have often heard business consultants and coaches tell their clients, the surest way to solve a cash flow problem, is massive and rapid growth in the business. This is likely the most dangerous growth myth of them all and causes more businesses to fail or die than any other. If your growth plans are designed to solve a cash flow issue, I suggest you begin your designing over again or change your advisor.
Massive or rapid growth could very easily exacerbate any existing cashflow problem and should never be seen as a solution to this issue. Any business growth comes with inherent risks, including increasing stock holding, increased staff costs, there may be additional infrastructure and other associated costs. As these cost inevitably increase, your already tight cashflow will become even tighter and your challenges will increase.
MYTH #3 – Growth Can Only Be Measured In Profit Terms.
For example, by measuring and managing the average total cost of client acquisition as a percentage of the total average revenue of your client base, you will be able to determine which clients fall below that average. This will allow you to either look for ways of increasing your sales to them, by cross selling, or you may consider dropping them from your portfolio. You may identify them as loss leaders, who have a network you have not yet tapped into. By making adjustments based on this information, you may not see an immediate impact on the profitability of the business, but the long term impact could be significant.
By measuring and managing multiple factors as your business grows, you are better positioned to identify problems before they hit you and opportunities before your competitors do. In fact most of these other factors will show you where the problems in your business are long before the profit tells you there is a problem. They will all make a major difference to the success of your business.
Focus on your plans and your actions and let the results take care of themselves.
Slow down, breath, plan and do your market research properly.
There are many myths about business growth, but these 5 are where I have seen the most businesses fails.