5 Challenges Startups Face As They Start To Grow Faster And Faster

March 16, 2015By
Startup Name

It’s time to have a discussion about how fast your startup is growing.

It can seem good to grow fast as a startup. We hear the stories about the rising stars in the startup world.

Heck, Inc. is dedicated to the fastest growing companies.

It’s appealing to grow fast, but there is something to be said about growing fast, but steady and in control. It’s never good to lose control of what’s happening because then you set yourself up for failure.

In the book, Good To Great (or possible Great By Choice), the example given was Southwest Airlines. They grew steadily during their early years and today are one of the most successful airlines in the world.

The most interesting thing I learned from that example was that Southwest would limit the number of locations it opened up during a period of its growth. They didn’t want to take on bad locations for the sake of growth. They had the control to grow within reason.

If you’re a startup and you’re growing…that’s great!

But there might be some challenges that come with growing too fast. Here are those potential challenges.

1. Pressure To Hire Faster

The first challenge that usually occurs with growth is the pressure to hire fast. Depending on the exact nature of your business you’ll need more people to handle the tasks that go into what you provide your clients.

When the hiring process is under pressure the tendency is to hire people that might not be the best fit for your culture. And the people might not be able to be trained with the skills to do what you need them to do.

The best companies seem to have controls on the people they hire. I worked for a company that grew steadily and that had been around for 100+ years and was still growing. They would hire slowly. It could take them many months to fill one position.

You might not need to hire on that time table, but hiring is very important to any business. You need to get it right most off the time and do it in the long run to succeed.

Set rules for the people you hire and stick to them. As soon as you become lax on those rules you’ll begin getting into trouble.

2. Employee Pushback

As the company grows you’ll get some pushback from employees. A few will pine for the good old days when things weren’t moving so fast and the team was smaller and tight.

There can also be pushback when you bring on people from the outside to take on leadership roles. People can sometimes think that they should have been put in those positions.

This happens to just about any company that grows. It’s really not something that you can help, but you have to know how to deal with it. If you let things fester between employees you can build a poisonous culture that could bring the company down in various ways.

Look for signs of discontent and communicate with people that are having issues. See if they can get on board with the vision of the company and if not you’ll have to move on from each other. You have to have people on board with the vision for the future if you want to grow.

3. Too Much Debt

As you grow there will be some needs that come along with the requirement of debt. Perhaps the biggest is a place to house all your new employees.

A bank may be willing to give your growing and exciting company the cash to build a swanky new office building and it may seem like a great contribution to your city, but there are big risks with big debt. It’s usually for the very long-term and if business goes south at all it can be a challenge to keep up with the big payments.

Always look at the long-term outcomes including potential negative outcomes. Leave yourself outs when it comes to big purchases like office buildings. Maybe it would be worth it to rent a little longer to save up more cash or maybe some of your staff would prefer to work remotely.

There are other options.

4. Sales Goals Pressures

As you grow the pressure to keep up the growth can come on strong from a variety of sources. It could be from internal folks like the partners and your executive team or it could be from investors. It could be from employees who see a slower growth as a sign of decline. That could make them nervous.

As I mentioned earlier, when you grow fast and the sales goals pressure builds you may start adding on clients that really aren’t the best fit. This can get you into trouble in the long-term. The money up front may feel good and help the sales goals, but in the long run you may not be able to give the client what they expect. And it may take up too much of your team’s time to try and provide what was promised.

Bringing on clients is like hiring. You want to bring on the absolute best fits as much as you can. It may seem like all money is good money, but that’s not always the case. Short-term money could hold you back from slow and steady long-term growth.

5. Lagging Product And Service Improvements

As you grow fast your product or service team can come under pressure to deliver on what’s been promised. And when resources go into growth you could lose focus on maintaining the status quo. You don’t want to lag behind on what you already offer because someone could come in and offer something better.

Keep the focus on providing the best product like you have been. Don’t let that deteriorate as best you can. Some of this may be necessary to grow, but always keep an eye on how your current clients are with their happiness of what you’re providing. If the negative feedback starts to come in consistently poor you’re looking at trouble.

Final Thoughts

These are just some of the challenges with growing too fast. Growth is obviously good, but don’t let things get out of control. I know you would be happy with slow and steady growth over the long-term instead of a big rise and a big crash.

Keep your vision to the long-term and focus on making decisions that are best for that period of time instead of in the immediate future. That will usually leave your company in good position.