Growing the Wrong Way: 5 Ways Small Business Growth Can Be Toxic

When your business is growing, everything seems exciting. You welcome your alarm in the morning and that first cup of coffee just tastes better. You may even enjoy your morning commute and tackle a full email inbox with enthusiasm.

Growth is exciting. You can serve more customers, create a greater impact on the world, and increase profits.

But growth also reveals weak areas and amplifies problems that were previously too small to notice. Not all business growth results in positive outcomes. Sometimes, it’s actually toxic. Here are five growth-stage problems to watch for that can turn your small business expansion into a toxic mess:

1. Weak, Misguided, or Absent Leadership

Every business is limited by the abilities and vision of its leaders. You have to decide where to spend your time, what instructions to give, and what endeavors will help the company continue to be successful — and it all has to work AND be communicated properly to employees.

There are many types of toxic leaders in an organization — from founders who are too overextended to manage growth to CEOs whose poor communication skills leave their team clueless as to where the business is headed and why it’s headed there.

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Growth doesn’t solve problems with leadership; it exposes them. To get a pulse on your abilities as a leader, keep an open line of communication with your employees and stakeholders, and surround yourself with mentors and a network that will give you open and honest feedback.

2. When Growth Exceeds Cash Flow

Sometimes growth happens so fast that it exceeds your cash flow. For many service-based businesses, providing work before receiving payment is just the price of doing business.

Allowing “growth,” which coincides with expenses, to outpace your cash flow puts the company in a dangerous position. Eventually, investors, banks, and possibly even customers will avoid your business like the plague — forcing you to liquidate assets just to pay the bills — or even forcing you to close the business for good. Avoid this growth mistake by managing and monitoring your cash flow and properly balancing your budget. Careful financial planning and a strategic plan for receiving payment will help your business avoid this toxic mistake.

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3. Playing the Telephone Game with Your Vision

If your vision isn’t clear at the top of the company, the jumbled up mess passed down to your managers and then to your employees is sure to be confusing. When employees are sharing different messages with each other and customers, it’s going to have a negative impact on your brand and business.

Problems with communication are easy to correct when your business is small; simply have a team meeting or face-to-face discussion. But, as your team and business grow, so does the impact of errors; the longer it goes unaddressed, the larger the problem grows.

Take time to clean up this mess before it turns toxic.

Start by sending a clear and consistent message to your leadership teams. Review your business’s vision, mission, and value statements regularly so your leaders know how these relate to your company’s evolving needs. It is vital to educate managers and employees so they can effectively communicate the right message to every audience.

Even better—involve your leaders, managers, and employees in this process. When everyone is involved, the feedback you receive will sharpen every aspect of your business’s messaging.

4. Once-Small Problems

When your company is a team of six or seven people, it may be feasible to buy coffee and toilet paper from Wal-Mart, purchase lunch for everyone each Friday, and use Microsoft Excel as your CRM.

Growth makes things tricky. When you’re buying coffee and toilet paper for 100 people, there’s money to be saved by purchasing smarter. There is a big difference between feeding 10 people and feeding 100. Expenses need to be reevaluated constantly to avoid letting what were once-small costs get out of control.

To keep once-small costs from evolving into big problems, you’ll need to assign (or hire) someone for internal support. You need additional office help, HR managers, and internal systems to keep the nuts and bolts together, running efficiently, and economically as your business scales.

5. Deadly Employees

Every business needs standout employees. What you don’t want are employees who simply don’t fit in. Observing how your employees interact and affect each other is crucial, especially during periods of growth. Your team will be comprised of many different personalities, and it should be! This is what will make coming into work interesting and help your team approach problems from different perspectives. However, there is a difference between individuals who stand out and ones who don’t fit in with your culture and the way you’re growing as a company.
There are many ways staff can be toxic during growth; let’s look at two common issues:

Bad Examples: With growth comes new employees. And those new people will look to senior employees for cues. Any inefficient and lackadaisical approaches will set the tone for what’s accepted. Productivity will be affected across the board by the bad examples from within your team.

Growing in a Different Direction: Growth isn’t easy for those who don’t like change. You will encounter employees who don’t buy into the new plan or are upset that something didn’t go their way. Watch for the signs of disengagement on your team and resolve issues early. If they lose passion for the company, they can pull others down with them. Misery loves company.

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It’s not possible to be 100% sure your growth is devoid of toxicity. But, you can limit your risk by detecting the common problems outlined here and then working through issues with leadership, budgeting, communication, internal systems, and employees. Problems will come up; it’s inevitable. The best business leaders plan well and react quickly when they arise. Don’t let toxic problems like ruin your growth and potential success.

Want to know the toxicity levels in your business? Contact us today to set up a free initial consultation.

Michael Straza, founder of Straza Consulting, is an entrepreneur, consultant, and business management specialist with over two decades of experience leading, growing, and assisting small businesses to achieve their desired levels of success.

Through Straza Consulting, Michael works hands-on with founders and leaders to analyze and review processes, develop goals, and map out the steps and timeline to achieve those goals. In addition to co-founding Zdi, a successful telecommunications company in Bloomington/Normal, Illinois, Michael has teamed up with multiple health-care focused companies and medical practices to assist them in overcoming financial and industry-specific barriers while putting the right processes and systems in place.

For additional information, view Straza Consulting’s portfolio here and follow Michael Straza on Twitter @ConsultStraza.

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