Once you find the money to start a business, it is time to move onto the growth phase.
Some companies grow fast, while others take more of a slow and steady approach. Some spend money to grow revenues, others cut costs to grow profits.
There is no perfect formula, however growth—be it in hiring, new markets or more cash—is often the key to keeping a business successful for many years.
Consider that, according to the Small Business Administration, the failure rate for new businesses increases the longer a business is in operation. Stagnating, or taking steps backwards, can be dangerous to the health of the business.
So what holds small companies back? Consider these five reasons some small companies fail to grow:
1. Inability to change. If you become complacent, don’t expect to reach your growth related goals. In most industries, the marketplace and its demands change, and your business has to change with them. That means being open to new ideas, a willingness to innovate and take calculated risk. Businesses that are afraid to pivot or too rigid in their model are limiting themselves.
2. Failure to hire the right people. It is next to impossible to grow a company without the right people on your side. What does your recruitment and hiring process look like? Has it brought you good employees in the past? Does it leave something to be desired? Surround yourself with the right people and your job will suddenly become much easier.
3. Poor leadership. Some people are cut out to be a boss or owner, while others struggle to find their footing. Even if you consider yourself a bad boss, there is always time for change. A few adjustments to your approach with employees could be the difference between growth and a company that remains at the same level, year-after-year. Think about leadership in terms of developing employees, putting people in positions where they can be successful and looking at yourself in the mirror first when things aren’t going well.
4. Lack of cash. In a recent SurePayroll survey, we found that about half of small business owners had extra cash on hand to take advantage of new opportunities or to pay for unforeseen expenses. It’s critical to have that reserve in case you need it. You never know what surprises will come your way and if you’re not prepared financially, it could have a devastating impact on your business.
5. Bad marketing strategy. You can have the best product or service in the world, but unless others know about it you won’t make much progress. How a company markets itself is a major factor of its success. For example, you may consider hiring an SEO consultant if you need help generating business online. Simply put, your marketing strategy should yield measurable results. Carefully monitor the ROI on your various efforts—whether it’s digital advertising or going door-to-door.
Starting and running a business certainly isn’t easy. Keeping it open and growing is even harder. Avoid the common traps listed above, and you’ll be a step ahead of most of the competition.
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Andy Roe is the General Manager of SurePayroll, Inc., a Paychex Company. SurePayroll is the trusted provider of easy online payroll services to startups and small businesses nationwide. SurePayroll compiles data from small businesses nationwide through its Small Business Scorecard optimism survey, and exclusively reflects the trends affecting the nation’s “micro businesses” — those with 1-10 employees. You can follow Andy on Twitter @AndrewSRoe.