Common mistakes in fast growing businesses

Written by Jonathan Ross
03 Dec 2023

In rapidly scaling businesses, growth can be exhilarating, but it can also lead to significant mistakes. Below I share some common missteps that businesses often encounter during periods of high growth. These observations offer valuable lessons on what to avoid as you navigate the challenges of growth.

  1. Neglecting Employee Development

One common mistake is relying on team members who are resistant to personal growth. Failing to invest in people can lead to stagnation within the organisation. To avoid this pitfall, it’s crucial for leaders to actively motivate their teams and hire individuals who foster a culture of continuous improvement.

  1. Ignoring Critics

 In the world of entrepreneurship, it’s easy to become accustomed to ignoring doubters. However, dismissing critics entirely can be a mistake. While it’s essential to maintain resilience, it’s equally important to filter and analyse the validity of critical feedback. Sometimes, these doubters offer valuable warnings that can help steer the company in the right direction.

  1. Complex Communication

 When scaling rapidly, communication can become a game of “telephone,” leading to misunderstandings and confusion. To address this challenge, it’s crucial to simplify communication by sharing ideas both verbally and in writing. Engaging team members by seeking their feedback can help ensure everyone is aligned.

  1. Inadequate Staffing

 During periods of rapid growth, key positions may come under extreme strain. Failing to overstaff in these critical roles can lead to operational issues. Overstaffing ensures that the company can effectively handle the increased production volume, preventing bottlenecks.

  1. Poor Cash Flow Management

 Growth can place significant stress on a company’s cash flow, potentially leaving it vulnerable to minor disruptions. To mitigate this risk, it’s essential to actively track and manage cash flow. Entrepreneurs may also consider securing loans or other financial resources to maintain financial stability in case of emergencies.

  1. Inadequate Inventory Planning

 Extreme growth often requires a substantial investment in inventory. Failing to anticipate the lag between inventory needs and customer payments can be a significant oversight. Traditional banks may impose strict covenants, making it essential to explore more flexible borrowing arrangements that align with the company’s growth projections.

 Working in the business rather than on it can hinder long-term growth.

7. Rushed Recruitment Decisions

 Recruiting too quickly during a growth phase can lead to problems. Instead of rushing the hiring process, consider utilising pre-vetted bench contractors who don’t require a long-term commitment. This approach allows companies to access experienced talent without the challenges of onboarding full-time employees.

8. Lack of Transparent Communication

 Silence can be deadly when a company is expanding rapidly. To address this issue, establish clear and consistent communication with your team. Implement mechanisms like weekly updates to inform employees about developments and areas where updates are needed.

9. Limited Diversity of Perspectives

 As a company evolves, it becomes fundamentally different over short periods. To address this, ensure a diverse set of perspectives within your management team. Diverse viewpoints can provide valuable insights, helping the company adapt and grow effectively.

10. Lack of Strategic Clarity

 Growing without a clear understanding of why can lead to resource allocation issues. It’s essential to periodically pause, analyse, and retool the company’s growth strategy. This approach can help avoid blindly pouring resources into unproductive areas.

11. Overlooking Delegation

 Neglecting to delegate tasks can hinder a leader’s ability to pursue high-level strategies. Delegating menial tasks can free up valuable time for strategic planning and effective leadership.

12. Failing to Focus on Strategic Leadership

 Working in the business rather than on it can hinder long-term growth. Shifting the focus to strategy, vision, and growth planning allows leaders to drive the company forward effectively.

13. Neglecting Team Feedback

 Creating an environment where team members believe their feedback is valued is essential for success. Acknowledging and acting on their input fosters collaboration and a stronger, more unified team.