9 Biggest Business Expansion Problems Faced By Entrepreneurs

The largest conglomerates you see around started small. Some, like Apple Inc., started in a garage. While their rosy growth story is the stuff that great documentaries are made of, their history is marked by obstacles that they had to overcome.

Business growth is often a good thing. It increases the company’s value and profit. However, to grow, a business requires proper plans, systems, and resources to cope with the increased demand for products and services. Every business has to surmount intractable challenges to grow and expand into new territories. Below are nine of the biggest business expansion problems that you may encounter as an entrepreneur:

1. Poor Planning

Many business expansion problems are the result of poor planning. A successful business always starts with a business plan. Proper planning prevents poor performance and business failure. With a good strategy, a company can navigate around challenges to stay afloat. Poor planning, on the other hand, can sink a business and see its fortunes head south.

Without a good growth plan, a company risks incurring loses, losing clients, or worse, closing down. When planning, consider some of the equipment and resources needed for efficient operation. These include new computers, new furniture, and new employees. Planning for these and setting appropriate budgets is a hallmark of a good business plan. You should also establish a plan for certain business laws or hire a lawyer if you aren’t well-versed in the area.

2. Roles and Responsibilities

As a business grows, the workload increases and employee responsibilities can overlap, leading to common business expansion problems. Tasks become more specific and defined. Assigning duties to people with matching skills and expertise is critical for business success.

When roles and responsibilities are not correctly assigned, and when tasks are not clearly defined, there’s bound to be overlap and inefficiency. Everyone need to understand their role and how it fits into the overall picture. Besides, as a company grows, new positions are created to cope with the challenges of growth. These positions must be clearly defined and outline the specific roles and the responsibilities of that office.

3. Communication Problems

The ability to communicate the company’s vision and goals effectively  is a critical component of a healthy, growing business. Where communication is a problem, a business will struggle and eventually crumble. Issues in communication may be informed by changes in a company as it grows from one phase to the next.

As processes become more complicated, making sure instructions, schedules, and tasks are understood, is critical. Without a sound communication system, many issues are likely to crop up. One way of ensuring an efficient communication system is having weekly meetings to discuss goals and progress, and to deal with problematic issues as they arise.

4. Lack of Proper Systems

For business processes to run smoothly, it’s crucial to have systems in place. Accounting systems, for example, are necessary for handling the financial aspects of a business. Inventory tracking and sales systems monitor how the company is doing. Without these systems, expansion can be very messy and uncoordinated. Besides, systems are critical since they enhance accountability and transparency.

5. Space Limitations

With growth, there’s a need to hire more employees, which means more office space. It’s sometimes a challenge to find appropriate offices that can accommodate all the employees. A cramped office space makes for a poor working environment and affects the growth of a business. So, as your business grows, you will soon have to contend with the challenge of limited space.

6. Need to Hire New Employees

A growing business requires two things: an expanding workforce and efficient systems. Business growth will eventually mean hiring new employees and creating new departments such as the Human Resource department. These are not easy tasks. If not well planned and executed, problems can arise. The new employees will probably need to be trained, which takes time and resources.

7. Financial Challenges

As a business grows, it needs money to fund expansion plans. You might need money to open new franchises or hire new employees. Proper management of finances is critical. Nothing can bring a company down faster than mismanagement of funds, especially during the expansion stage.

8. Outdated Practices

Business practices and trends are continually changing. As your business grows, new technologies necessitate a change of tact. Old techniques that once worked efficiently may no longer be appropriate in today’s business environment.

The ability to embrace new ways of doing business will keep your company relevant and on the cutting-edge of technology and more savvy business practices. For instance, marketing trends are continually changing. The ability to evolve with these trends is critical, or else you may encounter many business expansion problems.

9. Poor Customer Service

Another business expansion challenge is poor customer service. Maintaining the same customer service that has helped the business grow can be quite a challenge. Increased workload could make employees slacken in their work. This may manifest in failure to get back to customers on time.

Besides, if you operate with the same number of employees you had when you started, as your business expands, they may not cope with increased customer demands. This ends up compromising the quality of your customer care service. The result is that you may end up losing customers and eventually shut down your business.