The 5 Problems That Fast-Growing Companies Face

By Rieva Lesonsky

Growing fast might seem like the answer to a small business owner’s prayers. But often, the perils of rapid growth illustrate the saying, "Be careful what you wish for—you might get it."

In the past year, high-profile entrepreneurial companies including Uber and Nasty Gal have made headlines for not-so-positive reasons. Once held up as role models, these businesses and their high-profile founders are hitting turbulent waters. What lessons can their troubles teach you about navigating a business growing too fast?

1. Company culture matters

Businesses growing too fast run into trouble when their PR persona doesn't jibe with what's actually happening inside the company. If you promote your business as an egalitarian, forward-thinking innovator, but your workplace is actually rife with sexual harassment, it's only a matter of time until customers find out about the disconnect and dump you like a hot potato.

To-do: It's easy to keep control of your company culture when there are only a few of you. However, as your business expands, be sure to instill the same culture in all your new employees. Employee handbooks, onboarding practices, and systematized training help ensure everyone's on the same page. Make sure your managers embody your company culture, too.

2. With capital comes complexity

Getting a fat round of funding from angel investors or VCs looks like the answer to your dreams—but often becomes a nightmare. In return for the money, you now have investors looking over your shoulder and second-guessing you, or even directing you.

To-do: Before you seek financing of any kind, know what you're getting into. If you take money from investors, you'll need to report on results, live up to their expectations, and maybe even give up some control of your business. The alternative could be losing it entirely.

3. You've got to pay the bills

Buzz and hype can take you far, but if you aren’t paying your bills on time, you’ll eventually crash and burn. Rapid growth brings new costs, as well as the temptation to splash out on fancy office furniture or an expensive advertising agency to maintain your image.

To-do: Keep careful tabs on your company's cash flow. You may need to monitor it daily to stay on top of things. Weigh any new expenses carefully, with a focus spending in ways that will benefit your business—not just your ego.

4. Hire wisely

When rapid growth stretches your small business’s staff too thin, it's a recipe for disaster. Overworked employees can’t do their best, and your company’s product or service quality suffers. Eventually they become resentful, spurring morale problems and potential PR disasters.

To-do: Employees are the foundation of your business, so don’t scrimp on hiring. Have plans in place for how you will add staff as needed. That doesn't necessarily require hiring full-time employees; it could mean knowing where to find the best independent contractors, virtual employees or temporary workers.

5. Walk the walk

You're busier than you ever thought possible, getting next to no sleep, and walking on air from the excitement of your business growing so fast. It's easy to start believing that the rules don't apply to you. If you expect your employees to work for peanuts or your vendors to wait for payment while you’re signing the lease on a snazzy new sports car, you're in for a big surprise.

To-do: Never ask your team to do something that you wouldn't do yourself. Of course, you should focus most of your time on high-value activities, but you also need to be willing to get down in the trenches when it counts. Showing employees that you understand their sacrifices and your partners that you honor your commitments will help your reputation grow along with your sales.

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Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at rieva@smallbizdaily.com, follow her on Google+ and Twitter @Rieva, and visit her website SmallBizDaily.com to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

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