You are here Home » Start-ups » Business Plans » Challenges Businesses Face During The Growth Stage

Challenges Businesses Face During The Growth Stage


According to research, the average period it takes for a business to reach the growth stage ranges between seven and ten years. Although this may vary for different companies, it is not surprising that it takes more than five years for business establishments to begin to record consistent progress. Unfortunately, the growth stage tends to be characterized by challenges that require creativity, experience, and sometimes, technology to help resolve it. Here are a few of these challenges.

1. Intense increase in diverse customer needs

Image Credit

Customers are vital to the growth of any establishment. In some circles, they are described as the makers and breakers of a business. Indeed, through customer patronage, companies rake in revenue and increase a business’s profit margins. However, with business growth comes the increasing necessity to meet diverse customer needs. Indeed, when dealing with an eclectic range of customers and clients, it is vital to be circumspect in your expectations.

First of all, you need to know what they want and have a plan to meet those demands. More importantly, during the growth stage of your business, it is vital to be able to sustain the demands that come from the increasing market. This can contribute to your business’s longevity on the market. Unfortunately, ill-prepared companies falter at this stage due to the obvious lack of experience in meeting growing demands. Hopefully, that will not be your story when your business reaches its growth stage.

As a tip to sail through this tricky stage, you will find it helpful to either diversify your product line or open new branches to reach the growing demands of your customers. Knowing which path to take will also depend on the customer analysis you conduct as a business.

2. A growing trend of employee apathy

According to LinkedIn research, workplace apathy comes in five stages: felicity, sanguinity, disillusionment, melancholy and apathy. These phases come in the order as arranged and usually strike particular age groups within the work setting. Employee apathy can be as disturbing as the concerns attached to dwindling productivity. So, why does it happen during the growth stage of a business? Research says it can happen when workers reach a saturation point during the first ten years of employment.

It helps to remember that the growth stage occurs within the first seven to ten years of business commencement, as mentioned in the introductory parts of the article. Therefore, employees who started with the company may reach that saturation point by then. Apathy is a productivity killer, which explains why businesses have to address it the moment it begins.

According to human resource experts, employee apathy can manifest as chronic lateness, regular absence from work, and a general lack or disinterest in time management. Indeed, time tracking for businesses is an essential part of managing a workforce. If you lose sight of it at the growth stage of your business, it could spell a downward spiral in employee productivity.

3. Need for inventory expansion and management

When your business is one that deals with tangible products, the space initially reserved for the extra stock may need some expansion in the growth stage. When you have orders flying in from all over the place, you just cannot rely on the inventory you began with ten years ago. That expansion could be all you need to move on to the next stage of your business, so keep this in mind.

When you ignore a crucial inventory expansion, you risk losing valuable clients you may have started the business with. That, unfortunately, could translate into money loss. A real-time inventory management system helps your business keep track of dwindling stock when demand is at its highest. 

4. Demands of a growing workforce on the business

Image Credit

When the business reaches the growth stage, it makes sense to expand. This usually takes the form of additional staff employed to play critical roles within the company. In reality, you do not want to overburden inadequate staff with an unfair workload. A growing workforce requires improved remuneration and other resources to motivate them to work harder. Scaling up your business while expanding your workforce could present additional challenges.

This includes increased business administrative processes. Also, your human resources department may need to deal with complex procedures that come with managing a larger and extensively diverse workforce. More importantly, you may have to revise your business processes to conform to the country’s labor laws. Remember that the dynamics in managing a growing workforce are entirely different from handling a smaller staff. Moreover, national labor laws may compel you to upgrade your workforce processes the moment you cross a certain threshold.

5. New competitors

In the world of business, expansion, and growth automatically mean the establishment has entered into new markets. With that also comes the subject of new competitors. These business ‘opponents’ are there to spur you to do better than you already are. Moreover, this new class of competitors is usually more sophisticated than what your business may have been used to. With sophisticated competitors comes the need to adopt highly marketable strategies to excel and remain relevant at the top. You may want to consider it as new market penetration.

Furthermore, having new competitors also means appealing to their existing customers. The business world is a highly competitive space that thrives on the concept of ‘stealing’ an ‘opponent’s’ customer in droves. If you’re ill-prepared for this stage, it can be difficult or even impossible to succeed at this fundamental stage of business growth. Meanwhile, as you plan towards outsmarting new competitors, remember to plan for the long term. That is because it is not a given that the moment you overtake your competitors, it will remain like that for the long haul.

6. Choosing a new business structure

As your business expands, you may see it helpful to adopt a new business structure. Remember that you are venturing into new territories, and like going to war, your strategy should be razor-sharp. A new business structure certainly impacts existing tax burdens, among others. The caution here is to ensure that this new structure conforms with existing laws and standards in the business world. Moreover, your choice of structure will guide future achievements you may attain as a business establishment.

7. Outgrowing business technology tools

Image Credit

The tools you commenced business with are likely to become obsolete in the next seven to ten years. If you’re already in the growth or expansion stage, you may notice that certain technology tools are no longer fit for the intended purpose. In other words, you may have no need for them, or your business urgently requires upgraded tools with more uses. Fortunately, you can avoid the inconveniences of using obsolete business technology tools.

First of all, it helps to do an early assessment of the tools your business currently requires before you expand. It could be accounting software, increased internet data needs, CRM technology, etc. Thankfully, you can overcome or avoid this challenge by preempting your business needs. More importantly, please bear in mind that technology continues to advance at a rapid pace. And, proactive businesses make it their mission to adapt to these changes as often as they can. You cannot afford to lose out.

To conclude, business challenges at the growth stage are pretty common. Research has shown that more than 50% of established companies often face peculiar problems during this phase. While they are not totally avoidable, your proactive preparations can limit the negative impact on business.

You may also like