By Fernando Berrocal
It is no simple task to create a brand-new startup. On this journey, you'll run into a multitude of challenges. These organizational problems are perpetual, especially when it comes to making business decisions. As an entrepreneur, you've likely already established your firm and completed product development. However, you must concentrate on your main activities and develop your organization.
Since not all businesses reach the growth stage (many won't pass through launch), achieving development itself is an obstacle that may obstruct your progress. The launch phase includes solving various challenges and carrying out a variety of activities, such as gaining traction, securing cash to survive, and validating an idea/product. Following a successful launch, the procedure becomes more difficult as you focus on the expansion, which often requires increasing every achievement from the launch phase by a factor of ten. Frequently, businesses encounter the issue of growth stagnation. This is where the firm's growth slows down, and in a worst-case scenario, the organization begins to exhibit indications of deterioration. It's critical to address a typical starting stumbling block and some entrepreneurs quickly consider expansion; however, they should concentrate on the growth. Few entrepreneurs comprehend the distinction between scalability and expansion. As a result, choose the best moment to expand–and fully devote your attention, efforts, and funding.
Some shareholders must pay their dividends; management requires the funds to build the business. This creates a contradiction between ownership and control, and it's why you must know when to expand. Entrepreneurs frequently struggle to determine the best time to do this. One of the most crucial things is to comprehend that expansion doesn't imply obtaining more earnings. It may actually refer to innovation, improvement of experience, or development of a feature, all of which can lead to more customers (and revenue).
Here are some of the main indicators that it's the ideal moment to expand:
- Increment of demand: When your customers keep asking for more products, you'll know it's time to expand. They might even request you to start a franchise in their area, or ask you to update a feature.
- Competitors are scaling their strategies: You must be aware that paying attention to your competition is an essential business activity. It helps you enhance your branding and develop new products. Mainly, competitors’ knowledge opens the door to new business prospects. You should be interested in learning about the profiles your rivals develop, their improvements, the number of funds their startup financing round brought in, etc. If your rivals’ organizations seem to expand, there are possibilities that yours can as well.
- Investigate a new market: Exploring new markets is a privilege that organizations can access only when they are keen to upgrade. Planning emerging market research before your existing one flattens out is a suggested strategy. This provides you an advantage over the competition and may result in greater revenue. Remember that you'll need to expand your production capacities to meet the increased demand and supply and will need to recruit people who have worked with these clients. If the anticipated returns appear to be beneficial, don't be hesitant to invest.
- Stagnant growth: This is a term that contrasts with the other indicators, and is known for being damaging. Negative cash flow, a lack of knowledge, or bad marketing fails to contribute to this problem. This is a life-or-death scenario in which rapid yet well-considered actions are required to push the development trajectory higher. Determine which location or channel is causing your business to suffer. Act immediately once you get relevant facts.
Every product has a saturation point; that's why your business may not expand past a certain point. If you track their life cycle, you'll see that they develop quickly, then reach a stumbling halt when the growth either stagnates or declines. If you don't innovate, that growth will slow (and the scenario will become disastrous.) As the business capacity reaches its limit, the expansion comes to a stop–and then anxiety spreads. What should be your next move? Issues and impediments may obstruct your organization's growth once it has reached this degree.
Here are some points to consider:
- Lack of vision: Founders should have a clear image of their organization's long-term objectives. Typically, their main issue is that they don't know how to turn that into concrete steps that will help them get closer to their goal. As a result, the organization suffers from a lack of objectives, inefficient resources, a blurry organizational structure, and miscommunication. You will have a challenging time getting where you want to be if you don't have a clear picture and won't be able to create timely goals.
- There is no data-driven strategy: Any successful business owner will indicate that their creative vision necessitates the collection and examination of quantitative data. The problem is that either business people don't know what statistics they need to evaluate, or don't know where (or how) to collect them. Data helps in decision making, and should be at the heart of every choice. It's important to recognize that just looking at data and making judgments based on them are two distinct things. While the first is an easier task, the second is a necessary component of long-term progress.
- Investing in the wrong places: Any organization's main rule must be to invest money to generate even more money. In the beginning, all firms are cash-strapped. Investing in product development and acceptable growth opportunities are important decisions. However, be careful because “penny pinching” could stifle your organization's growth–and cost you more than you initially invested. Hire new talent when you observe obvious evidence that you need more knowledge. If you believe you need to invest in product development, go ahead and do so.
On the subject of growing your business: assume you've finally arrived at a stage in your organization where expansion is your only choice. Then, you must be cautious about your strategy choices for expanding.
It's recommended to use the following methods for expanding your organization:
- Take a futuristic approach: When entrepreneurs adjust to changes their firms expand. Due to the ever-changing nature of trends, entrepreneurs must have a modern mindset and work diligently to make fresh new product concepts. Businesses that use this strategy to grow can prosper and get a greater market share. Determine where you want your business to be and the goals you'll need to get there. Consider the new technology you’ll use to stay relevant (in case of potential problems.)
- Collaborate with experts: The contemporary “DIY” mindset may turn out to be detrimental. Working with professionals that have a demonstrated track record of building firms is preferable. These individuals can provide specialized advice and support to assist your business in scaling and growing. Mentors understand the best route for a firm to take to flourish and are ideally positioned to assist in avoiding the dangers that might harm growth.
- Growth driven by a product: In this type of strategy, an organization's timetable, prospects, and growth prospects are all centered around the products a business develops and commercializes.
- Adopt a customer-centric mindset: If you're looking for ways to grow your business, try becoming more customer-centric. The organizations that take a customer-centric strategy are 60% more likely to succeed. This strategy relies on getting to know your consumers and their viewpoints. Consumer-centric businesses want their products to be easy to use and focused on the customer. This pushes firms to provide complete solutions, recognize their demands, and meet their expectations. Taking this strategy entails giving your consumers something of value. This plan will result in your firm's long-term success.
- Emphasis on learning and development: Businesses may succeed in today's digital environment provided they invest in improving their workers' skill sets. Leaders that advocate the 70:20:10 rule can help their teams achieve success. Employees learn 70% by working, 20% from each other, and 10% through instruction. Organizations use this strategy to be able to retain and keep personnel engaged, and provide them with new skills that aid in product development and customer service. Leaders who foster a culture of learning and collaboration are better equipped to generate innovative ideas from their workforce.
- Experimentation: This entails experimenting with different techniques on a smaller scale. Businesses explore technology and marketing concepts apart from testing and experimenting. What are the advantages of this? Customer happiness and business growth are deeply linked. Businesses may understand the truth of market trends by introducing new products and services to their clients.
Growth is exciting because it brings with it both possibilities and difficulties. You should be aware that there is a significant distinction between expanding and scaling. When you've selected how to expand, think of difficulties as stepping stones toward expanded income, user base, and brand recognition. The initial task? Evaluate if there is enough maturity to grow. After that, your business can begin to focus on the problem of streamlining the growth process.
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