Pushing your startup to grow fast is one of the secrets of its survival, says Neil Patel in his article for the Forbes. As startup failure rate is dismal, you really need to use every trick possible. However, pushing your company to grow might also bring it to ruin. To make sure that doesn’t happen, you need to avoid some very specific mistakes, including hiring too much and not minding your cash.
4 mistakes to avoid when growing your startup fast
1. Spending your cash fast
Startup owners who failed cite ‘run out of cash’ as the second most common reason for this (Fortune). Therefore, it’s essential to watch your cash flow very carefully.
Most importantly, you shouldn’t let yourself overspend when your company becomes profitable. A huge part of the cash that you get from business must be reinvested back to power its growth. However, it’s also no less important to create a cash reserve that will save you in a pinch. It might be best to build that up first before you start actively growing. If you manage to close some very profitable deal at the very beginning, you can use that profit as a reserve and focus on growing right after.
2. Poor hiring choices
There are several hiring mistakes to avoid when growing your startup fast. First of all, hiring directly can be a mistake in itself because the more employees you have, the bigger are your tax payments.
To solve that particular problem, you can hire people through a professional employer organization (PEO). Those businesses can also offer some perks, like giving benefits to prospective employees, which allow you to recruit better talent. Consider using PEO brokers to find the best deal for you. Be sure to consider your growth plans and the PEOs ability to scale when choosing one.
Another major startup mistake is hiring friends/family/anyone not 100% qualified to do an excellent job. The quality of your talent can make the difference between success and failure for a startup. This means that you should never settle for anything but the best. Use PEO as mentioned above to attract the best.
3. Not changing prices as your operating costs grow
As your business grows you will have to pay more salaries, rent, transportation costs, etc. This means you will have to either find ways to save so you can maintain your current prices or raise them. As many small businesses use low price as one of their main selling points in the beginning, this will be a challenge.
To avoid this kind of problems, you should start with reasonable pricing from the start. Focus on building a strong brand, as customers are willing to pay more for a branded product.
4. Not developing and documenting business processes
When growing a startup fast you have to understand that what a small team could achieve through close communication and insight will be impossible to repeat when you hire new people. Don’t forget that even if your new employees are talented, they don’t know how exactly your business runs and how they need to make it better.
You have to document all processes and prepare an info package for new employees so they can integrate into the company better.