Growing Pains: 3 Missteps to Avoid
KARL R. LAPAN, PRESIDENT & CEO, THE NIIC
Where are you in the business life cycle? Expanding—whether that’s via an additional location, increasing operating volume with new or existing customers or adding to a product line—can be a way to take your enterprise to the next level. However, the risk is real, and therefore it’s essential to be prepared for any roadblocks or growth challenges. Just like driving a fast car, business builders need to pay attention to the traffic signs to avoid some of the common mistakes made when considering expansion (and how to side step them):
Underestimating project expansion costs/timeline
It would be better if you had a clear idea about costs before you venture into any deals and get blindsided by bills you can’t pay (growing broke syndrome). To avoid excessive debt or leverage, it’s prudent to enter into the project with some contingency (padding). Best case scenario, you’ll have some money left over—and your plans will not get derailed due to lack of funds.
Tackling too much too soon/unrealistic expectations
If you’re not careful, expanding too soon can eat into margins and profitability. Please don’t assume that opening a second location (restaurants make this mistake a lot) or launching another product will immediately yield double revenues or profits. You’ll need to factor in variables like seasonal trends, customer needs, and the competitive landscape. There are times when waiting to pull the trigger (pause) can work to your advantage.
Failure to conduct market research/ irrational exuberance
You may think you have a great idea, but the market might not be ready or willing to buy into it. Market research, customer discovery, and customer validation even at the most basic level, can provide invaluable insight. The trusty marketing mix (infamous 4 Ps) of marketing can be a great navigation tool to guide your decision, at least in the beginning. For example, if you’re considering launching a new product, your research should substantiate that hunch. Similarly, if you’re looking to open another storefront, business intelligence and incremental profitability needs to justify that. In other words, you can’t make a move solely based on intuition. Also, don’t just chase “shiny new objects” for the sake of chasing new things!
In short, you can never plan too much. That’s where The NIIC can be a valuable asset to you. You don’t have to go it alone. Having an experienced and trusted advisor, like The NIIC, dramatically increases your likelihood for success, and improves your company’s overall approach to managing key enterprise risks when you are thinking of scaling up and growing. These include a laser focus on: execution, product, financial and market risk.
The NIIC is an outstanding resource and sounding board to support your analysis and testing of your company’s infrastructure to determine your legacy beliefs, market assumptions, validation of new consumers and identification of opportunities to optimize the launch of new, credible products and services to capture market share.
Before you form a new business division, create a spinoff technology or license your intellectual property, contact The NIIC. Our resources, track record and expertise are unparalleled in the community.