Knowing how much of a minefield pricing can be, I can help keep your pricing decisions as simple, stress-free and profitable as possible!
There’s a strange side effect to success that few people anticipate.
You’re merrily tripping along the path to your ultimate dream, business is booming, you’re more successful than ever before, profits are soaring, and then….BOOM.
You hit a huge, seemingly insurmountable block in the road.
Success is the result of growth in your business, and it’s a glorious thing. But a lot of the time, entrepreneurs are so focussed on achieving growth – rolling out the new service, advertising it, converting new clients, delivering everything – they forget to manage that growth.
While your business is steadily attaining ever-increasing numbers in terms of revenue, clients, conversions and other benchmarks, the infrastructure you have in place isn’t able to keep up with your growth.
In essence, rapid success can easily lead to failure if you forget that managing business growth is as essential to the process as growing. In fact, it’s often more vital.
Without proper management, your growth will outpace your business’ reach and abilities.
This doesn’t just happen to big, huge corporations. It can happen to small businesses, startups, solopreneurs…anyone running a business has the potential to run headlong into this block when they start to become successful.
The Growth Paradox
This situation is a growth paradox, and it isn’t unusual at all. Afterall, your existing infrastructure was designed and implemented to handle the level your business was at when it was conceived.
If you were planning ahead, it likely allowed for a certain level of growth. But rapid growth will exceed any provisions and expectations extremely quickly. And it sneaks up on you.
The management systems you have in place slowly start to reveal flaws. Your quality control systems aren’t able to keep pace with the amount of work being done. And you are likely to find you have an ever-increasing workload resting on the shoulders of too-few people.
These flaws will reach a tipping point as your growth continues to expand, while your business infrastructure remains the same.
Reach that point and the whole thing falls apart.
You might be wondering, “How can a company be crushed by the weight of its own growth?”
But it happens more easily than you might think.
A sudden boom in business might see you sign several big new clients at once. You don’t think twice about it, because it’s what you’ve been working towards – this is the big goal you’re trying so hard to achieve.
But time and resources are finite.
If you misjudge the amount required for any of those new clients, you can easily find yourself with an unmanageable workload. And if you inadvertently do it for all of them, the weight of that load quickly becomes a problem.
Your immediate reaction to this outcome is likely to be disbelief, or even anger. You may feel like a failure, or worry that your business is fundamentally flawed, and the success you’re trying to achieve simply isn’t possible.
But success is a mindset.
Fast growth isn’t always easy to handle, but it can be done provided you shift your mindset to accommodate the success you wish to achieve, before you achieve it, plan accordingly, and are proactive about staying on top of your growth.
Here are five simple steps for managing business growth:
#1 Be Strategic In Your Growth
When it comes to growth, the biggest mistake entrepreneurs make is failing to have a clear strategy in place at the start.
You likely have a really clear idea of where you want to go. You probably also have a reasonable idea of how you will get there. (If you don’t, check out my post on dreaming big to help you roadmap it.)
But even with a really clear idea of where you’re heading and how you’ll get there, certain elements of your business can seriously affect your ability to navigate.
Maintaining control over these factors and analyzing as you go is essential to ensuring you don’t accidentally come to a grinding halt.
One of the things I encourage people to do while planning their business goals is to consider the additional support your business will need once you have more clients.
Whether it’s outsourcing or hiring new staff members, growth almost always requires additional people, and they will need paying.
Your cash flow needs to fully support that need, and ensure you can hire people at the right time, to avoid becoming overwhelmed or letting down any of your new clients.
In other words, your growth strategy needs to account for the fact that, in order to make a lot more money, you first need to make enough money to cover the expenses required to earn a lot more.
If your brain is tied in knots by that thought look at it this way: a growth strategy will highlight the opportunities that lie ahead for your business, assess the resources required to sustain that success, and ensure you have the infrastructure you need in place at the point you need it.
Not three months later when you realise clients have been receiving less than stellar service. Not six months later when you’re buckling from burnout because there’s more work than you can physically handle.
But right when you need it.
#2 A Scalable Growth Plan
Here’s a bizarre truth: business growth is relatively easy to achieve; sustained business growth can be incredibly tough.
I just mentioned sustainability and that is a huge part of managing business growth. But two things are required for growth: a strategy that plans for sustainability, and a scalable growth plan.
Having a strategy that only supports your business through the initial stages of growth, but doesn’t consider the long-term needs and requirements of that growth, is only going to get you so far.
It’s better than no strategy at all, but at some point you’re still going to find yourself stuck in the growth paradox, with growth outpacing your ability to keep up.
Scalability is an essential aspect of business growth because it not only ensures you can continue to grow, it allows you to grow in stages.
If your growth plan requires you to go from 0 to 100 in one big leap, you’re going to struggle. On the other hand, if you can take it in small steps, expanding a little, ensuring you are fully capable of supporting that level of growth, and then stepping it up to the next level, you’re far less likely to fall crashing back down.
When you start out it may be you working alone. As you get more clients, you might hire additional people – an assistant to help you out, and people to handle elements of your business outside your zone of genius. But if you trade time for money then, at some point, even with every aspect of your business handled by someone else, you’re going to hit a wall.
You will need to hire someone to do what you do best, so that your business can do more of it.
If that is physically impossible, you don’t have scalability. You will be able to grow so far, but no further, because time is finite and you can only work so much.
An artist can only paint so many canvases. She can hire people to deal with everything else in her life and business, but the actual painting is something only she can do. It’s unique to her.
That unique talent is what people pay for.
Hiring another artist won’t help; nobody wants some other artist, they want her.
The only way to scale a skill like this is to consistently increase prices, charging more for the same amount of work.
This is certainly something you can do, but not all markets are like the creative sphere, where people will happily pay high prices for the sake of getting something from the one genius they love more than any others.
A lot of markets have a ceiling.
A ceiling is a value point (or perceived value point) beyond which customers will no longer continue to pay increasing prices. When you reach that level, you can go no further, because the market won’t support it.
You might have dedicated clients happy to continue to meet your prices, but you’ll struggle to attract new clients. The increase in revenue is mitigated by a decline in client conversions, and you remain in pretty much the same place, but with less work to do.
While that can be an end in itself, and very appealing, if you want total scalability in your growth strategy, you need to remove the ceiling beyond which growth is impossible (or at least extremely difficult).
For example, our artist might start selling more than her original pieces – prints, merchandise, etc. that allow people to buy her work at a much lower price point. That is an entirely scalable plan.
Or, she might create some passive income products around her work, like a book or eCourse teaching people how to paint. Again, totally scalable.
All businesses are capable of having a scalable growth plan, you just need to think around your core offering until you can see a way to do it.
#3 Managing Your Money Growth
Money is a wonderful thing. More money is even better. So it’s really difficult to grasp that abundance could ever be a problem. But from a practical perspective, growth can often lead to issues when it comes to keeping your money under control.
Part of managing your business growth is managing your money as you continue to have more of it.
We frequently make the mistake of thinking that the more money we have, the easier it is to manage, because there is plenty to go around. But higher revenue brings with it increased costs, more complicated cash flows, and other issues that you may not have considered.
If you are struggling with money management in your business, I’d highly recommend implementing Profit First. As you’re reviewing your money there are four things in particular you need to stay on top of as you grow:
Control Your Costs
As your business grows it will naturally incur higher costs. Hiring new people, outsourcing more, upgrading systems and software to accommodate your growth, and numerous other elements inevitably cost more as you become increasingly successful.
Consider your email list, for example. Growing your list is vital to growing your business, but the more people you have on it the more your email management system is going to charge you. Every time you step up into a new subscriber bracket your premium will go up.
Increasing costs aren’t a problem as long as you stay on top of them.
Plan out your escalating costs vigilantly. Streamline your systems where possible to avoid unnecessary costs. And don’t fall into the trap of thinking that more revenue means you can afford to get every new business fad that comes along.
Just because you have to money to pay for things doesn’t mean you actually need them. They may not be right for your business, and if they’re not carefully considered could actually hinder your growth.
Try to avoid splurging.
Control Your Debts
One of the perks of growth and success is the ability to pay off debts and avoid incurring more. But occasionally there are times it makes financial sense to borrow for something. There are other times when it’s unavoidable.
Staying in control of any debts you have is essential. You may be able to negotiate a better schedule for payments, consolidate, or transfer balances to ensure a lower interest rate. Whatever you do, try to avoid incurring more debt whenever possible.
Keep Your Cash Flow Forecast Up-To-Date
Part of avoiding debts is ensuring your cash flow forecast is as accurate as possible. This means updating it regularly and plugging any holes before they happen.
Keeping your cash flow up-to-date and as accurate as possible will also help you analyse your current situation, see how improvements can be made, and ensure your growth strategy is fully supported by your financial situation. You can also identify any capital that is currently going unused and can be invested.
Consider Your Payables And Receivables
Finally you will want to look at your payables and receivables to see how your liquidity can be improved in the future. There are a few ways to manage your payables:
- Are you getting the best rate for the services you use? Can you switch to a better tariff, change your payment terms, pay annually to save money, or monthly to ensure a smoother cash flow?
- Make payments promptly upon receiving an invoice rather than waiting until the due date.
- Ensure direct debits are set up to cover all regular payments so they aren’t forgotten.
There are also several ways to ensure your receivables are well managed, for example:
- Ensure your payment terms are crystal clear.
- Have a system in place for collecting payments automatically.
- Be swift to resolve any issues and have a designated process or person who handles overdue accounts.
#4 Create Quality Control Systems
The more your business grows the more important it is to monitor your quality control.
This is fairly easy when you’re working on a relatively small scale, but the more clients your serve, and the more you have to deliver, the more likely it is that things will start to fall through the cracks.
For example, when you have the same number of people doing a lot more work, the quality of that work is bound to reach a point where it suffers.
It’s extremely difficult to maintain exceptional quality while continually increasing the quantities involved without a quality control system in place.
Determine which elements of your business require quality control, then develop a clear and effective system for each. Get regular feedback from your clients to identify any issues that may occur, and be swift to rectify problems.
#5 Stick To The Plan
By now you have a clear plan for managing your business growth. It’s important to stick to it!
A huge part of management is effective implementation, and growth management is no different.
Make sure every member of your team is up-to-date on the plan, understands their role in it, and knows who to go to if they need help.
Review your strategy on a regular basis and check for any areas that aren’t working. If your growth continues at a good pace, at some point you’re going to reach the end of your existing plan. Your growth will outgrow your strategy.
Just as it’s important to have a strategy in place before you grow, it’s essential that you update that strategy to accommodate anything new as soon as possible (ideally before it happens!).
If you need a little extra help getting yourself into the right mindset to manage your business growth, download my FREE Success Mindset Book List and dig into some awesome reads that will help you uplevel your business.
And if you’re ready to really take control of your money and effectively manage your business growth, I highly recommend implementing Profit First in your business. Book a free curiosity call, or download the opening chapters of Mike Michalowicz’s best-selling Profit First book to find out more…
Knowing how much of a minefield pricing can be, I can help keep your pricing decisions as simple, stress-free and profitable as possible!
Profit First can benefit the growth of your business from DAY ONE!
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