When Expanding A Business, Who Should You Be: The Tortoise Or The Hare?

When businesses first get started, there’s always a debate about how to expand. Some entrepreneurs recommend that you just grow as fast as possible, not bother thinking about the money and hire the people you need. But, of course, the more risks you take, the faster you can crash and burn, especially if your business is seasonal. These are the high-risk, high-reward types who feel that they need to have immediate success, even if it causes them extreme anxiety.
On the other end of the spectrum are the slow and steady types. These are the entrepreneurs who are always aware of the fact that their business success might have more to do with current fads than it does with any sustainable product.
According to Jay Jumper, the president of an e-signature service, there’s always a temptation among entrepreneurs to want to move as soon as possible. It’s their restlessness, he says, that causes them to want to act. Entrepreneurs just want to get things done and move onto the next challenge. But he cautions against rapid expansion for the sake of it, especially without any prior forethought. Simply reacting to high demand in the moment has its perils.
Think Strategically
A better approach, according to Jumper, is to think strategically. Sure, you might have a lot of demand right now, but how might that change in the future? Will acting now put your company at an advantage, or will it give your competitors an edge? Long-term profitability requires a lot of forecasting and careful deductive reasoning. Products must be viable over the long term.
Go Long Term
There’s certainly a place for “hit and run” businesses in the market: stealing market share when it’s profitable to do so and then slunking off into obscurity once the opportunity has passed. But these sorts of businesses are better operated by companies already in the market, not entrepreneurs looking to create their own empires.
Great startups are those that actually provide value over the long term and make plans to be around for decades to come. They buy things like Armstrong metal buildings, which last for decades and cheaply expand their network in a way that is suitable for their business. They don’t make a plan based on short term assets which will require high upkeep in the future.
Avoid Cash Flow Problems
Entrepreneurs who want rapid expansion almost always run into cash flow problems. These sorts of problems are okay if you’ve got lots of investors lining up ready to bail you out. But they’re serious if you haven’t. The biggest mistake that companies make, according to Martin Okner of a New York-based business advisory firm, is that they spend too much on staffing and advertising early on in their venture. He suggests that companies take more time developing their pipeline and getting the processes sorted before trying to gain more customers.
When it comes to the tortoise and the hare, Okner is less clear cut. He points out that fast-growing companies can easily burn out, but companies that are slow to move don’t always last a long time. His advice? Focus on efficiency.