I chuckled the other day as my wife Pamela said, “Can we shut down the ads until I get a few more people hired? We can't keep up!!!” It seems counterintuitive to most new business owners, but sometimes, you need to slow down your business growth to set yourself up properly for long-term success. I shut off the ads.
There are many reasons to slow down your business growth, but our reason was simply that we didn't have enough staff yet to keep up with the work coming in. The balance between available staff, resources, and customer demand is critical to maintaining a successful business.
At the beginning of the year, Pamela quit her job as a nurse and started a maid service. In her last year of working as a nurse, every time she walked into work, her Garmin watch immediately screamed at her, “Reduce Your Stress!” She had cleaned for years on the side and found it relaxing. Nursing pays well, but I hated to see her stressed constantly, so every time she talked about quitting, I told her, “Go for it! You'll probably make more money running your own business after the first year anyway.”
Growing Too Fast
As a business consultant, I had no doubt that we could get her up and going. What I didn't fully anticipate was that she'd go from no customers to hiring three employees and signing up six new customers a day within a matter of months. It's a problem I've dealt with in my own business and with overwhelmed owners that I've coached, though, so I knew how to handle the situation.
It was time to slow down our business growth. Luckily, we had set up the foundation properly so that we were able to resume growing as soon as new people were in place to handle the workload.
Two Common Mistakes Most New Business Owners Make
1. Failing to Invest in Growth
Most new business owners that I see fail to thrive do so because they don't invest in their business. They don't set up basics like QuickBooks to track their business finances, get the business set up properly, invest in marketing, or do some basic planning. Often they are unaware of financing options to continue investing in their business growth.
A conversation I've had with many business owners goes something like this. “I don't make enough to pay for ads.” I scratch my head a bit and respond, “That's a circular issue. You aren't making enough because no one knows about your services. If you invest in getting the word out and do it properly, you would have more than enough business to afford ads.”
When we started Pamela's business, we had no illusions that we would replace her salary right away by transitioning from being a nurse to being a maid. I saw this as an investment in her health and future business revenue and knew it was a scalable business. Knowing that, we invested heavily in getting her set up with everything she needed to be successful, and we're now starting to see the returns from that investment. If we hadn't made that initial investment, we wouldn't be discussing being unable to keep up with the business, even with three employees.
2. Growing Too Fast
Once people start investing in their business, many owners have the opposite problem. They start growing too fast and can't keep up with everything. Many eventually figure out the hard way that too much business can actually be WORSE for business than not enough. If they don't slow down their business growth enough to add the necessary resources to keep up with demand before they get overwhelmed, they can easily crash.
These owners work hard, earn a great reputation, then start getting more work than they can handle. Once extremely responsive, they stop even calling back people when they ask for an estimate. They might hire a few people, but without the proper systems in place, their quality deteriorates, and they tend to get frustrated with the “lack of good help.”
Eventually, their hard-earned reputation dies as they stop returning calls and being as responsive as they once were. Negative reviews pile in, and their business crashes and burns while they miss all their kids' activities because they're too busy working. While rebuilding your reputation is possible, that can be a lot harder than building it up in the first place.
Properly Managed Businesses Scale to Meet Demand
Luckily we had planned from the start for this to be an actual business, not just a side job for Pamela. We intended to scale this from the beginning, not get a new client every few weeks from word of mouth. We hired as soon as we had enough work to keep someone busy and offloaded work to employees. We focused on training and getting the right people on board.
Properly set up, a business should scale like that. After pumping the brakes and slowing down our business growth for a couple of weeks, we turned back on the faucet and started filling up our new team's schedule. If your business is growing a little too quickly, don't be afraid to tap the brakes, make any necessary corrections, and then hit the gas again. You might save yourself from a crash.