How We Failed. Small Business Growth Strategies That Don’t Work.

I’m an entrepreneur. I wouldn’t call myself a businessman yet, but I’m definitely full of opportunistic spirit and willingness to build a great company.

I didn’t become this type of person; I was raised this way. Both my parents are small business owners, and they raised me as their successor. Since I was six, I was taken to business meetings, trade fairs, factory visits, and supplier business trips. I was raised at the factory, and my father would always share his wisdom about large and small businesses with me.

Unfortunately, our family business didn’t survive past 2008 crisis—exactly the year I was supposed to officially start my career and gradually take over the family business.

But that was a blessing to me. With all the skills, and most importantly, the mindset, I started my own small business.

I quickly discovered that what my father taught didn’t work in other setups and started acquiring new knowledge.

While I’m still on this journey and I couldn’t certainly tell you how to develop a business growth strategy from scratch or some ready universal strategies for small businesses that work, I can name a few that I believe universally don’t.

Focusing on One Component

When I was eighteen, I was a firm believer that sales were the main, the only, and the most important part of the business.

How could I possibly be wrong? You don’t have a business if you don’t sell. 

You are not growing if you don’t acquire new customers, and you are not making any revenue if no one is buying from you.

I could continue listing logical assumptions that I took as facts back in the day. But if there is one thing I’ve learned over this time, it is that business is built on multiple, equally important components.

The Three Components of Any Business

Since I have a hobby of introspection and blogging, I’ve developed a love for generalizing things.

In this case, I would generalize three equally important components of any big and small business as follows:

• Sales
• Delivery
• Service

These three can be framed and named differently, but essentially, any business consists of three parts: selling your products or services, delivering your existing products or services, and supporting your products or services.

If you build your long-term growth strategy on only one, and most entrepreneurs prioritize the sales component, you will inevitably hit the wall of your delivery component not keeping up with your sales.

Negative Feedback Loop

This is the situation I struggled with in 2017 when I started my consulting career.

We began a small business and focused our efforts on acquiring new customers. We visited exhibitions, launched paid advertising, built a great website, started a blog, and did many different things, all focused on customer acquisition.

This resulted in us finding a few great customers who started paying us. Yet what did we do? We kept going with our marketing strategies. Why? Well, because we had a contract with an ad agency for another six months that we couldn’t stop. Because we had hired a copywriter for another 15 articles. Because we had bought tickets to a trade fair that we couldn’t miss.

What happened was that we were spending most of, if not all, of our budget on customer acquisition and tried to cut every possible cost on delivery.

And then what should have happened happened. We started losing existing customers one by one and gaining new customers wasn’t so easy.

Replacing Customers

By the time our contract with the ad agency ended, we had lost four customers that we had acquired before launching that campaign and ended up with the same number of customers as we had before the campaign. We simply replaced customers with new ones.

We lost time, we lost money, we’ve lost important strategic partnerships, and we damaged our reputation.

When building your small business growth strategies, think about how you will balance the focus.

I’m not saying you shouldn’t focus on sales, delivery, or customer support. It’s not OR; it’s AND. You should be able to build a team that does all that simultaneously.

We managed to do it now, but it took me almost seven years.

Working for One Customer

Another bad strategy that I fell victim to as a small business owner was working for one client.

You may say—this is obviously a bad idea and a bad business growth strategy.

Well, I also thought so. And I didn’t do that on purpose. I slipped on the slippery slope of great volumes from a large corporate customer.

When we started our consulting business, we had a so-called utilization problem. We had hired people who, at best, worked 70% of the time during a year.

In essence, utilization means how long your employees worked on a customer-paid project while hired by you.

When we just started, we made this expensive mistake. We hired more people than we needed.

Our utilization numbers dropped below 50%. With the current run rate at the time, we would go bankrupt in three months if we didn’t do something.

The Job

So I started looking for alternatives. And I found a company offering long-term contracts for multiple people with profiles similar to what we had.

A few phone calls, a few virtual meetings, a few demos, and I’m sitting on an airplane to Warsaw to meet new people who are excited to work with us, meaning new business growth opportunities.

Fast forward—we signed up for a year, then for another year, and then for another year.

We signed up for a job to implement CRM in a large, transnational company.

The Mistake

What I didn’t understand at the time was that we essentially didn’t solve the problem of low utilization; we just won ourselves some time to learn how to sell in a way that we don’t have that utilization issue.

We sold our capacity at a low rate in high volume to a large company. It was comfortable, predictable, yet destructive.

You know how that happens. You start with what seems a temporary solution and end up having the temporary solution implemented as permanent.

Three years later, the customer ended the contract. They promised to extend it but decided they wanted their in-house team. Which is fine, and I’m all for that.

But we didn’t learn to solve the utilization issue; we learned to make cheap placements of people who we had to manage, pay benefits, sick leaves, and watch their mood swings.

We had to lay off some people. The most terrible experience I ever had in my business.

Let Some of Your Existing Customers Go

What I’ve learned is that you have to look at your existing customers strategically. If the customer is too big to swallow—let them go.

Accept the fact that you may just have to grow a bit more for this type of customer. Otherwise, you may end up a one-customer company.

I’m getting goosebumps from fear while writing this.

Focusing on Standardization and Automation for Small Businesses

Lastly, there is one strategy that some new, especially young, entrepreneurs follow: relying too much on tools and automation.

While tools are great, they help and make your life easier, and your processes more predictable and consistent—they will not do the work for you.

I see a lot of new small businesses looking for a magical CRM system that will help them sell. Yet when I ask them how they do certain things, they respond, “Can we see how this is usually done?”

Unknowingly, they are looking for industry best practices, yet such best practices should not be learned from implementing software developed by companies not representing your industry.

My best advice is—hire industry professionals who know more than you if business growth and prosperity are your main goals.

Stop trying to automate everything and don’t standardize your processes before you build them and test them on your existing customers.

Final Word

I hope this article helped you think over your business growth plan better.

My best piece of advice would be—don’t look for shortcuts. You know your best strategy for growth already, and you know the trade-offs of a bad one.

Stick to your values and trust your intuition to attract potential customers.

If you happen to need a helping hand and a trusted advisor—talk to me or one of my team members. The first consultation is on us.

Cheers, 
J.