Mistake #2: Failure to plan and adjust for growth

After being as pessimistic as possible in an attempt to identify the worst case scenarios and develop a business plan to meet those contingencies, now you need to be wildly optimistic.  Sales have exceeded all expectations.  Clients are coming in left and right.  You are working 20 hour days and loving it because it is your business and it is booming!

But have you planned for this contingency?  When a business grows too fast it can be just as deadly for the long term health of the business as a natural disaster and sometimes just as sudden.  Picture this, demand is high, you are busy, and a client comes in with an order for your Product X.  You say no problem.  Client leaves thinking Product X should be available within a week.  After all, Product X is produced by other companies within a week.  You do not get to that order for a month because you are so busy with prior orders.

Now, you have a reputation with one individual as someone who takes an excessively long time to deliver on your promises.  A few more clients left with that impression and word will get around that you take too long to complete your orders.  Your business will not be a success for long.  The good news is that you will not be quite so busy and could get an order done in a week.

Or how about this alternative:  Your business has boomed and you did your planning for how you would handle that growth, or so you thought.  You’ve brought on new employees, you’ve renegotiated a lease for more operating space, your contracts with vendors included options for increases in your demand and you exercised them, your transition into a bigger business has been a success.  But one day you lose a major client.  This client represented anywhere from 20-50% of your business.  No fault of your own here, the client left for other reasons.

Now how about that lease for all the extra space you no longer need?  How about the commitments you made with vendors for quantities and qualities of materials or equipment you no longer need?  What about those employees who are now extras?  How easy do you think it would be to replace 20-50% of your current book of business in time to pay next month’s bills?  Did you plan for that?

D. Bryan Willis

D. Bryan Willis

Bryan Willis is a Tyler lawyer providing legal services across Texas in the areas of business law, litigation, probate, and estate planning.
D. Bryan Willis

Leave a reply