When it comes to planning, most people talk about plan A or plan B (or even plan C) but hardly ever plan S, which I call the “Plan for Success”. Every business, no matter how small or at what stage, needs a strategic success plan. Periods of growth can present many challenges which entrepreneurs seldom anticipate and that can rapidly escalate into larger problems:
- Your fulfillment department cannot handle the volume of orders coming in and may potentially lose orders.
- Orders are not being processed in a timely manner.
- Customer service is not able to handle the call volume of customers calling about their order status.
- Your website/business may start getting negative customer reviews.
- Your purchasing department didn’t order enough goods to anticipate the increase, the vendor is out of stock and the next delivery could be delayed by a month or more
- Production is getting backlogged, causing additional delays and increasing customer service calls.
When the above scenario arises, it means that systems were not put into place to anticipate and accommodate rapid growth. These are some of the more common growing pains that ecommerce businesses face. When you have to turn down orders, take products off the site, or substitute items, issue refunds, these are all opportunity cost and loss that otherwise could have been avoided and prevented with careful strategic planning.
In my own experience with unplanned growth, our company moved three times in three years because we outgrew our facilities. We also ventured into a wholesale business, which we knew nothing about, that distracted us from our main business. It was very stressful and very costly. Looking back, I should have signed shorter leases or leased a warehouse that wasn’t too big but that had room for us to grow. I could have put off the wholesale venture until after the main business was stable.
Business growth is a good thing, but it should be managed and controlled so that the repercussions are not going to tarnish your brand or your future revenue. If your business grows too fast and your company can’t handle it, your brand starts getting a bad reputation. More money will have to be spent to undo the damage than it would have taken to plan it carefully from the start. Not only will unmanaged growth lead to production problems, it will take a toll on staff morale, if you don’t have the right skills, and you may start to see your organization unravel from within.
Because the people who help run your business are critical to its success or failure, our next post will focus on the organization’s talent pool. Like it or not, the people who got you here today may not be the right staff to get your business to the next level. Do you have the right skill sets in place? Are there individuals unwilling to accept and foster a company’s growth? They must change or they’re on the chopping block. This is not a performance review. You need to ask yourself if you have the right team in place to help grow your business and achieve your long term plans.
Great article. Just like the old saying goes, "If you fail to plan, you plan to fail." I think so many retailers are so afraid of their position shrinking that they do not plan for when they experience growth, much less explosive growth.
It's so true, the right people make all the difference. Do you have any other tips to help plan for this type of growth and what happens if the growth doesn't come?
Shirley Tan says:
Hi Yonge321 and IMD54
Thank you for taking the time to post your feedback and comment. You're absolute correct yonge321, when entrepreneur hold part of their commitment back or is only partially committed, whether its resources or mentally/emotionally, a certain aspect of the growth and success will not be realized. It’s like being in love but not fully giving it your soul just in case the relationship doesn't work out and you don't want to be "too hurt" or disappointed. Business commitment/plan works the similarly, as an entrepreneur, you've really need to give all you've got and then some, you have to have the mindset that failure is not an option to give it a chance of being successful.
I would say of all the wonderful tips and advise out in the business world, the number 1 tip that I would offer is FOCUS. That is what I learned from my experience over the 20+ years of being a retailer/wholesaler and in Online E-commerce. You can't be all things to all people, its not possible to serve everyone's needs, whether you're in the service industry or online e-commerce, you need to specialize and with the specialization, you need to Focus your energy and passion to what your strategic business plan calls for. In other words, multi-tasking is over rated and rarely works in business, doing too many different business and too many projects, its rare that an entrepreneur can do them all well and in reality, most will fail or fail to achieve its full potential.
Shirley Tan says:
I forgot to answer your last question, what if growth doesn't come?
Well, you have to have the belief that it will. If you're on top of your Plan for success and you keep at it, keep tweaking, evaluating and executing. Perhaps there might be external factors that occurs that is out of your control, but if in your mindset, failure is not a option and that success and growth are not loss forever, merely delayed.
Jay I. says:
Hi! I agree that company people and fulfillment infrastructures are very important if you know growth is coming. But if you don't know that growth is coming, then the preparation investment might become unnecessary expenses, that could be used for actual growth - like expanding product portfolio or new channels for advertising and trade. Growth requires work, time and knowledge. Fulfillment is just moving boxes, that any one can do. In my case I decided to outsource fulfillment from an early stages. It paid off when growth came but also paid off when my company shrunk back to normal due to seasonal changes and competition. I used several fulfillment houses, but finally stayed at allpack fulfillment who can handle my seasonal volume fluctuation. I recommend outsourcing fulfillment to anyone as the most important Plan "S" (plan for success).
Nice article. Many times it is hard to let people go who no longer fit into our business models to confused feelings of loyalty. We know long before that last straw where you have no choice left to let someone go due to financial changes or other growth in the company.
It is important to have the strength early on to do the right things for the company and not regret putting it off.