Running a small business is both exciting and challenging. Growth fluctuations, economic uncertainties, and unexpected obstacles, such as a global pandemic, can make sustaining and expanding your business difficult.
But growth is possible, even amid turbulence. As American entrepreneur and businesswoman Caterina Fake said, “The most successful entrepreneurs I know are optimistic. It’s part of the job description.”
Rather than becoming discouraged by fluctuations in growth, look at them as necessary and normal steps in the early life cycle of a business. And don’t fly into these obstacles blind — use a roadmap of expert advice to guide you.
Why Does Early Business Growth Tend to Be So Volatile?
There are several reasons your new business may be experiencing volatility in growth. Small businesses lack the established market presence and brand recognition of larger companies, which makes it more challenging to predict customer demand. It also means you’re likely operating with more limited financial resources.
“Small business owners are the most creative people in the world,” says Jaedon Khubani, VP of Business Development at Copper Fit. “They have to be in order to keep up with the competition and survive. That innovation and dedication pay big dividends down the road.”
Fine-tuning your business model and pivoting in response to market shifts will have an even more significant impact on a small business than a large one. However, the heightened competition from big-name companies means small business owners must be light on their feet. All this means it’s essential to have a strong game plan for your business.
How To Thrive in a Volatile Growth Phase
Here’s what the experts recommend doing to thrive in the midst of growth fluctuations.
1. Establish a Solid Financial Foundation
“The biggest priority, especially in an unpredictable market, is financials, financials, financials,” advises Victor Mathieux, Co-Founder and CEO of Miracle Brand. “You want a strong financial base and a financial safety net for emergencies.”
Setting up this financial foundation means creating (and regularly reviewing) a detailed budget that accounts for your monthly expenses and projected revenue. This budget should be flexible enough that you can update it as needed but not so freewheeling that it changes every month.
If possible, you should also set aside cash to cover unexpected expenses or emergencies and diversify your revenue streams as much as possible. If your original business plan relies on the success of a single product, brainstorm ways to expand that product into other potential services.
2. Research Your Market
Gathering data about your specific industry, local market, and competition can help you prepare for (and even predict) market fluctuations.
“Even in that volatile growth stage, it’s still possible to have contingency plans and to come in each day with a plan. In fact, good planning and preparation are even more necessary now than they will be once your numbers even out,” says Rayla Rappaport, a CPA at Finaloop who specializes in ecommerce accounting software systems for businesses.
Customer surveys and feedback channels are one way you can collect data about your market. Traditional media outlets and social media platforms are another. Both can help you keep an eye on new trends and competitors and track what windfalls or obstacles may be coming your way.
3. Plan for Every Occasion
When you have no idea what the next quarter will look like, you’ll need to plan for every possible financial scenario, not just the one you hope will occur. Create multiple scenarios for the future of your business, ranging from worst-case to best-case, and craft an action plan to respond to each scenario.
“Resiliency is probably the most valuable trait in a small business owner,” reflects Jin Young Woo, CEO of Like Dreams. “But resilience requires preparation. Bouncing back from disaster is much, much more difficult without a plan for how to do so.”
It’s also important to regularly review and update your scenario planning as the market changes. In our globalized and fast-paced economy, contingency plans will become outdated much faster than they have in the past.
4. Streamline Your Business
Streamlining your workflow as much as possible to achieve maximum operational efficiency will help you be quicker on your feet in the event of major fluctuations in the supply chain, customer demand, or the market itself.
Jack Carrere, CEO and Co-Founder of Prokeep says, “When hurdles come down the road, and they’re definitely coming — you don’t want to end up stumbling over your own protocols and processes. Get to the point where the day-to-day running of your business is automatic, and when things do happen, you can afford to put your mental energy towards fixing these problems.”
To improve operational efficiency, first identify the bottlenecks or pain points and then devise solutions. Consider replacing manual tasks with automation where possible, developing a strategic inventory management system to prevent over and understocking, and continuously identifying areas where you can reduce costs.
5. Risk Management
Scenario planning goes hand-in-hand with a comprehensive risk management strategy. First and foremost is insurance. Research plans and providers to find the most appropriate insurance plan to protect your business against unexpected catastrophes.
“Being a business owner, regardless of size, means constantly preparing for events that could sink your business,” warns Miles Beckett, Co-Founder and CEO of Flossy. “Especially in that early growth phase when there’s a lot of volatility, anticipating potential risks will save you a lot of headaches down the road.”
Staying up-to-date on industry regulations and ensuring your business is legally compliant are crucial to risk management. So is cybersecurity — unfortunately, the threat of hackers, fraud, and malware infiltrating your business is all too real. Invest in the technology and protocols to protect your business and customers from cyberattacks.
6. Invest in Your Team
Your employees are your most valuable asset. The return on investment of a strong team is priceless when they help you stay afloat and pivot quickly amid turbulent growth.
“When building your team, focus on the two Cs: Camaraderie and competency,” advises George Fraguio, Vice President of Bridge Lending at Vaster Capital. “You want a strong team that feels comfortable with you and each other, and you also want them to know what they’re doing. When your team can work independently of you, you know you’ve done a good job.”
Foster a positive work culture that encourages adaptability, resilience, and honesty. Invest in training programs to boost your team’s skill set and maintain open and transparent communication channels with your team.
7. Focus on Your Customer Relationships
A loyal customer base can keep your business moving through market turbulence, industry changes, and supply chain issues. Invest in those relationships with excellent customer service and effective content creation.
Max Schwartzapfel, CMO and Fighting For You lawyer says, “A high customer engagement rate is the gold standard for a small business. Regulars help keep the lights on during tough times, and you want to show them how much you value and care about that relationship.”
Maintain an active and engaging online presence through social media, email marketing, and a user-friendly website. These platforms keep your business at the forefront of your customer’s minds and provide them with several points of contact should they have questions or concerns.
8. Adapt and Innovate
Thriving through growth fluctuations requires adaptability. Both you and your business model must be open to change and innovation as necessary.
“When businesses have only one avenue of success, where their overall strategic plan is set in stone, you often don’t see them surviving the early growth stage,” cautions Patrick Schwarzenegger, Co-Founder of MOSH. “Being able to pivot on your business plan, revenue streams, target audience, all of that is essential to truly thriving.”
Encourage a culture of continuous improvement and transparency within your workplace to benefit from insights and improvements at every level of the management ladder. Don’t be afraid to pivot your business model if your key performance indicators suggest a change is necessary.
9. Lean on Industry Experts
Finally, relationships with other industry professionals and experts in your field can be invaluable during times of turmoil. Financial advisors and consultants may also be useful for navigating growth fluctuations, although these professionals tend to dispense advice with a high price tag attached.
“Cast the net wide and invest in relationships with your peers, including other small businesses in your community. When you see another business leader doing something different, don’t be afraid to call them up and ask about it,” suggests Greg Hannley, Founder and CEO of Soba Texas. “You don’t always have to learn from your mistakes to gain wisdom in business. Sometimes, you can learn from the mistakes of others.”
Staying up-to-date on business and financial news is another way to identify experts in your field and utilize their experience for your own business.
The Roadmap to Success
Owning a small business is not without its challenges, but it can also be intensely rewarding if you have the structures and strategies in place to keep afloat during rough times.
Mark Twain once said, “The secret of getting ahead is getting started.” Don’t let growth fluctuations and the challenges of being a small fish in a big sea hold you back from your dream of business ownership.