5 Traps to Avoid When Growing Your Business

In between "lean-and-nimble" and "huge and powerful?" You're at the most perilous time for a company. I learned firsthand.

There's a natural danger zone that occurs in the growth of most businesses. When starting out, you are extremely nimble, with low overhead and little complexity.

Once you become larger and more successful, you have plentiful resources, an established brand, and deep bench strength.

Now, those phases each have their challenges, but it's the in-between phases that are the most dangerous.

It is a time where you lack the resources of a large company and the simplicity of a small one. Most companies that survive start-up mode go on to die a tragic death during this perilous transitional growth phase.

I've seen this first hand. As I grew my own start-up, I ended one year with 88 employees and 265 the next. Managing through hyper-growth makes cage-fighting look like child's play. Personally, I made just about every mistake possible, yet somehow managed to see the company through this difficult period, emerging stronger, larger, and more profitable.

Here are the top five traps that caused me great pain along my journey, and that you can easily avoid:

1. The Overcorrect

Inevitably, growing a business involves solving a series of problems. You'll have your share of moments where you proclaim "Doh!" (think Homer Simpson) at how stupid you were for doing something a certain way. The natural instinct is to sprint in the exact opposite direction. If you had zero client sign offs, now you'll want 78 of them. If you lost a team member because you provided no ongoing training, you decide to offer three-day-a-week development sessions. By overcorrecting, you run the risk of creating a new problem while solving the old one. Resist this temptation, even if the original problem fills you with distain. Life--and business--is all about striking balance, and the land of unintended consequences is no way to get there.

2. The Money Trap

Now that your company has real customers and real revenue, it's easy to just throw money at every problem. R&D slow? Add more bodies. Sales are light? Buy more ads. The challenge here is that you might not be solving the fundamental issue, which will only become exacerbated with time. As businesses grow, they become more challenging and more challenged with every step of the journey. This requires you to throw creativity and insight at issues as opposed to kicking the can down the road by throwing cash at every roadblock. If the underlying issue isn't solved, it will come back to bite you later on with significantly more sting.

3. Putting Religion Ahead of Science

When you were a start-up, all you had was your vision and belief (aka "religion"). Your burning desire fueled you and the company to break through start-up gravity and get your business off the ground. As you grow, however, religion alone won't be enough to sustain your trajectory. My business partner, Dan Gilbert, often says, "What got you here won't get you there." In most companies' evolution, there comes a point where systems have to be documented, training materials established, and processes architected (aka "science"). Without this foundation, a company fueled only by passion derails, since your 126th employee won't possess the same fire as team member No. 6.

4. Complicating the Process

My company started out with a lean, simple workflow. Then we screwed something up, and added an extra step to ensure that never happened again. With each subsequent issue, we added another step to the process. How much could one little extra step impact the process, right? Unfortunately, adding 10 minutes here or an extra person there added up. We eventually realized we'd built a clunky, bureaucratic, slow-moving, unresponsive mess. As a growth leader, you should be vigilant about eradicating complexity wherever possible. This applies to your products, processes, and communications.

In the words of legendary jazz musician Charles Mingus, "Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that's creativity."

5. Gorging Opportunities

As your business grows, you will be seduced by a growing number of new opportunities. You could add to your product line, expand internationally, or film a documentary. There will be no shortage of shiny opportunities luring you away from your focus. Flip-flopping leaders who embrace the flavor-of-the-week strategy rarely build sustainable companies.

Remember this: More companies die of indigestion than starvation. When you look back five years from now, your success will based much more on the times you said "no" rather than the times you said "yes." As the old Chinese proverb states wisely, "Chase two rabbits and both will escape."

As a leader, seeing your company through the treacherous waters of this transitional growth phase is overwhelming. Stay focused on the rewards awaiting you on the other side of the chasm, and fight to reach dry land as quickly as possible. If you can navigate through this challenging stage, you'll end up in the rarified territory reserved only for the champions.

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