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Jul 25, 2019
4 min read
Last update: Mar 22, 2023

6 Pitfalls and Growth Pains to Avoid When Expanding Your Small Business

According to data from a 2018 survey by T.D Bank, small business entrepreneurs have massive expansion plans. The researchers found that 53% of small businesses have plans to expand their workforce and revenue in 2019. This is a significant, 7% increase compared to 2017 when only 46% of SMBs expected revenue growth. Is your business geared up for expansion?

As you grow, keep in mind that an expansion strategy can be the best or the worst thing that happens to your business. Small cracks can arise during the growth process that can crumble down your business to nothing. Here are 6 of the most common small business growth pains and pitfalls you should avoid.

1. Poor Hiring Decisions

It’s easy to acquire human capital during the early days of a small business because you will often be dealing with the people you trust; friends and family. However, expanding your business means hiring more employees to increase production. This is tricky because attracting skilled labor is not easy, especially for startups and SMBs. You will be tempted to bring onboard virtually anyone who can get the job done, even if their skills aren’t at par. “They will learn and perfect their skills on the job,” you will hope.

Also, the early employees of a small business are often crowned with big titles. But as your business expands, will they have the education background and the experience needed to live up to the responsibilities of these titles? Will they have the leadership skills (both interpersonal and technical) to lead when you grow from your garage to a modern corporate office?

Save your business the embarrassment (and drama) of firing people you hired as a startup. Take time and find out the positions that needs to be created and hire people who will fit in, even as your business grows. Remember, you will not always be there serving all your clients, your employees will.

Lastly, hire people for their skills, not friendship or family ties. Avoid bloating your payroll with unskilled labor. Just hire the right people and make sure they have the necessary tools and authority to accomplish the set goals.

2. Poor/Dated Market Research

Just like when you were starting up your business, doing market research prior to expanding is vital. Conduct both primary and secondary research and make sure to gather the right information.

Dr. Madhav Segal, advises, “When doing market research, remember “GIGO,” which means “Garbage-In, Garbage-Out.” In other words, poor research input will result in subpar performance.”

Think about the 2010 FIFA World Cup in South Africa. Vuvuzelas, horns made of plastic, sold in hundred thousand. Statistics on this sale from such a time may not be relevant today. This is because the sales dwindled as soon as the World Cup was over.

The drift here is that information that is a mere month old can be irrelevant or offer less than the expected return on investment. So, conduct continuous market research and be the first to act.

It doesn’t matter whether you own the copyright, or you have patented the idea. Other entrepreneurs will always find ways to create their own version of your tech and put it in the market. A fitting illustration here is Apple which patented the touchscreen technology. But ironically, the number of windows and android touchscreen devices surpasses the number of Apple’s iPhone devices by far.

3. Regional/Cultural Differences

Cultural shock is not a new word to most people. The world is diverse, same as the business world. How you launch, market, and sell your product or service should be tailored to the specific market you are targeting. As you expand your business, you need to know what the business world is like on the ground.

4. Wrong Cash Flow Considerations

What if your newly expanded business does not work out as planned in the initial days after expansion? Will this affect your current business? How ready are you to counter such situations while keeping your current business free from financial struggles? Ensure you have enough capital to not only cover immediate expenses of business growth, but also contingencies that may arise during or even after the expansion.

Trying to grow fast can result in the business consuming all the cash for breakfast, leaving nothing for lunch and dinner. It creates a cash hungry monster that needs extra capital for skilled labor, system upgradation, employee training, more office space and so on. Before you know it, your once thriving business is dead. Ask yourself, “How ready is my business model, systems and workforce for growth?

The secret is to grow your business slowly over time. Even Rome was not built in one day. Gradual, continuous improvement is the best course of action for SMEs. If you take this spirit and vow to stay around, you will succeed.

5. Vision, Mission, and Cultural Erosion

Sometimes, growth happens so fast that everyone forgets the product and quality standards that made the business what it is today. It’s good to acquire new markets and start new product lines, but at the same time, make sure the primary business stays put, quality standards are maintained, and the corporate culture, vision and mission are kept alive.

Also, as the proprietor of your business, you need to oversee the day to day running of your small empire. Growing it only means working more but also smart. Maintain your focus on the overall vision of the business and don’t get lost in issues that only drain your time and energy. The workload will double at times. Learn to delegate. At the end of the day, it is not all about how much you work, but how much you get done.

6. Ignoring the Latest Trends and News

Fluctuations are the order of the day when running a business. Getting to know the latest trends and news is a golden way to ensure that you adjust to what your customers need. For example, consider a businessman offering car hire service.

Location trends could show that limousines are gaining popularity over the other types of vehicles in a certain area. This can be due to a newly set up five-star hotel in the area. Now, the business should adjust the expansion plans to hire extra limousines for that area. However, without knowledge of the local trends, news, and seasons, the business would most likely obtain a new fleet that would not go well with the demand on the ground. If your newly acquired fleet of cars are all sedans and your competitors bring in limousines, you are all but set to fail.


The above are some of the biggest pitfalls in small business expansion. Evading them may not be the exact recipe for sweet profits, but certainly a huge step towards investing your time and small business resources well. 

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