Business Growth Challenges
Your existing clients were acquired organically. Your business started out by grabbing low hanging fruits. As the market matured and competition heats up, it has become more difficult and costly to acquire new clients. Your business lacks a strong marketing campaign to quickly generate leads to feed expansion. It has also become less profitable. In fact, the cost of getting new clients is becoming so high that you are losing money just to expand.
Furthermore, your new clients are not of the same “quality” as existing ones. In a rush to get new clients, there is less time to research their background, leading to some new clients having less purchasing power, less credit worthiness or less loyalty.
In an expanded market (e.g. new market, new locations, etc.), the competitors behave differently from existing ones. Your business has not found an effective way of dealing with the new competition (e.g. a brick and mortar shop selling on an online platform). You have found that online competitors are different from physical stores. Their marketing strategies are also different. You have not found a way to effectively compete in this new market.
Your existing staff were groomed over the years organically. During your expansion, your company did not have a system to quickly and adequately train your new staff to the required standard. Consequently, poor customer service led to poor customer experience. There was a lack of repeat business and sales slid back as a result.
You also found yourself lacking a capable new manager for your new business. While you have experience managing front line staff, you do not have enough experience selecting, training, and managing managerial staff. An incompetent new manager will lead to the failure of a new project. While many businesses tend to select and promote existing staff to become new managers, there is always the possibility that these staff may be promoted beyond their capability.
You lack the bandwidth to handle the additional work required for the new business effectively. You also underestimated the financial resources needed for the expansion. This is especially when unforeseen obstacles came about that required injection of more money. The requirement for new funds became insurmountable and you had to abort the project, potentially killing a successful new business.
There is also a lack of support from your business partners. The path of $1 million is not always straightforward and smooth. The lack of support from your partners make it difficult to go it alone.
Despite a year or more of business expansion, you find that while your revenue is increasing, your profit margin is actually shrinking. This is likely due to a lack of attention towards cost management, resulting in expense increase outstripping revenue growth.
Certain current processes are not able to support your new business well. For example, a health supplement shop which serves walk-in clients now sells their goods through an island-wide pharmaceutical chain. In their existing business model, clients make their payment immediately, and there is a much lower volume to handle. Their current process is unable to track credit terms (required by the pharmacy) due to the much larger volume of transactions. This could lead to losses.
You may have faced one or more of the above problems when expanding your business. As a result, your new business may not have worked out. If you had been able to speak to a business coach to analyse and learn the reasons behind the unsuccessful expansion venture, you may have ended up doing much better. Scaling up would have been much easier.