Consequences of the Dreaded Growth Curse and How MSPs Can Avoid It

Consequences of the Dreaded Growth Curse and How MSPs Can Avoid It

November 18

Every company aspires to grow as a business. They want more customers, higher profits, and a better position in the market. With numbers showing an annual growth rate of nearly 18 percent, managed service providers are in an industry where rapidly firing out of the gates is not unheard of. While fast growth appears to be all upside, there can be both positives and negatives when things take off too quickly. Without the right infrastructure in place, a company that grows too fast might easily fall prey to the growth curse and subsequently see things spiral out of control.

The Case of Too Big, Too Fast

Company EFG is a small IT service provider on the rise. They enjoyed steady growth over the first couple of years – until a highly successful cross-channel marketing campaign took their visibility through the roof. Suddenly, the number of incoming calls has gone from roughly 10 to well over 100 per day. Email inquiries are flooding the inbox and the website is bursting with so much traffic, their web server barely has enough bandwidth to handle all the activitiy. This simple, yet realistic scenario illustrates how rapid growth can overwhelm a company that is ill prepared for the rush.

A surge in traffic might be a minor headache compared to the drawbacks associated with more complex growth scenarios. Other consequences might include:

Lack of physical space: Rapid growth might require a sudden need for more servers and network equipment, which could leave you with little space to work efficiently in the office or data center.

Money issues: Having a higher demand from the consumer end doesn’t necessarily mean you have the finances to cater to it. The need to financially support a rapidly growing business can take a tremendous toll on both the company and its employees.

Decreased morale: The mental and emotional strain that comes with juggling more responsibilities could lead to a considerable decline in employee morale. When morale dips, productivity usually isn’t far behind.

Employee turnover: Frustrated, overworked employees may decide to flee the companny. In the process, you lose valuable knowledge and skills while simultaneously creating a need to pour more resources into hiring and training replacements.

Lower quality: The rush to expand and meet demand could come at the sacrifice of quality. When the quality of your products and services drops, customers start to panic and reconsider their options.

The painful irony in all this is that growing too fast can lead to the swift demise of your company. But as you’ve probably guessed, it’s more about lack of preparation than anything. By simply drawing up a blueprint that outlines company objectives and anticipates the “what if’s”, you can avoid the dreaded growth curse and create a business model that is sustainable into the future.

Planning For Expansion

Although every company wants to prosper, not all are equipped to handle rapid growth. If we’ve learned anything here, it’s that timing is vitally important to the success of any growth strategy. Here are some questions for IT service providers to consider in the planning stage:

Can we handle expansion right now? Opening another office across town may very well give you access to a broader audience. However, it could prove counterintuitive if your business is currently running at maximum capacity.

Do we have the resources? Whether it’s opening up a new location or adding a new offering to your catalog, simply planning an expansion initiative will demand considerable time and resources. You need to be confident that your existing operations will continue to run smoothly in the process.

How can we minimize disruptions? From website maintenance to price increases, your growth initiative could impact the customer experience quite a bit. In your plan, determine how you can minimize the disruptions and grow without asking the customer to make too big of a compromise.

Prioritize Customer Value

Even companies with global reach will lose some business to the competition. Instead of racing to build the biggest customer base, concentrate on building a loyal customer base. For example, when you invest in an advertising platform like Google AdWords, tailor your ad campaigns to target businesses who can best benefit from your services. Trim your mailing list to subscribers who actually respond to your messages. This focused strategy will help you better control expansion costs and grow in a leaner, healthier way minus the fat and dead weight.

Learn From the Best

You’re not the first service provider to embark on a growth initiative and certainly won’t be the last. Don’t hesitate to look to others – even direct competitors, for inspiration. With so much information at  your fingertips, you can pick a given company and piece together a near complete picture that tracks the growth journey from inception to their place in the current timeline. It also wouldn’t hurt to hire a consultant or mentor who can guide your company with pointers on increasing your customer base, expanding your network, and other aspects essential to growth.

In order to enjoy positive growth, you may need to refine everday business processes, bring on additional team members, and even outsource certain elements to third parties who are better equipped to handle them. Keep these takeaways in mind to give your growth strategy the maximum flexibility and best possible chance of succeeding.

Photo Credit: United Soybean Board via Flickr