Each year we see thousands of new businesses being launched. Sadly, only 10 percent of startups make it past the starting gate. The initial launch period is normally focused on minimizing costs for the new business while maximizing its profits. For those startups that do survive, there comes the inevitable time when business growth becomes a priority on their agenda. Thanks to increasing optimism on the small business front, more SMBs are feeling confident in spreading their wings and exploring their options for growth. However, with growth comes increased exposure to risks. These risks are some of the most cited reasons behind the decision not to grow for many businesses. The good news is, there’s a lot you can do to prepare yourself and your business to face these risks. In fact, the more prepared you are for what is to come in the business growth process, the better chance your startup stands.
Possible Customer Mismanagement
A large part of growing your business is expanding your customer base to boost your business’ sales/ turnover and in turn, your profits. While this is beneficial for the business, it also comes with an increased likelihood of losing contact with your current customers. A growing customer rota will need more resources to manage, including customer contact resources to manage queries or after-sales advice. It is important that while you focus on acquiring new customers, part of your attention remains on retaining your past ones and making them feel valued.
To do this, business intelligence software can help you identify past customer shopping patterns and preferences. From this, you can schedule direct emails and tailored campaigns for loyal customers. When it comes to ensuring you are reachable, invest in automated customer service options. Alternatively, you may choose to outsource your business’ customer service needs to call and communication centers. This can help you keep your costs down while making sure customers are not alienated.
Increased Legal Exposure And Vulnerability
Any plans for growth will naturally include expanding your resources – both physical and human. With this comes increased vulnerabilities that you should insure against. For physical assets, additional office and warehouse spaces will require an amendment of your property insurance, while any addition to business vehicles (or purchase of an initial business vehicle) will call for a review of your business’ fleet insurance policy.
If you are going to be expanding your workforce to keep up with growing business operations, then you will also need to review your employee insurance coverage, including workers comp insurance and disability insurance. Most states, including New Jersey and Arkansas, require employers to have workers comp insurance, although the rules differ by state. For example, employers in Arkansas with three or more employees are required to have workers’ compensation insurance, while those in Louisana are required to secure workers’ comp insurance even if they have 1 employee (part-time, full time or seasonal). Meanwhile, those in Kansas are required to carry occupational injury compensation insurance unless their gross payroll is less than $20,000.
Increased Visibility To Cybercriminals
One of the go-to avenues for growth is online. This is no surprise, since about 80 percent of internet users in the U.S are expected to make at least one purchase online in the year, while 60 percent of millennials (a key market) do their shopping online. It’s not just shopping either: online reviews influence 93 percent of purchases. Unfortunately, increased visibility online means your business could be increasing its vulnerability to cyberattacks. In recent years, cybercriminals have gravitated towards poorly protected small businesses, and the average cost has been estimated to be $200,000.
In addition to establishing strict online security measures like securing your customer and internal database, you need to consider appropriate cybersecurity training for your staff (both current and potential hires). This includes enlightening employees about good internet security habits, such as verifying emails and links. Finally, if you plan to include online sales in your growth plan, securing your online payment gateway should be a major concern.
Growth is a natural and welcome part of running a business. However, in pursuing your plans for growth and success, a smart entrepreneur should be sure to plan for the risks that come with their growth plans. After all, failure to prepare is essentially preparing to fail.