business woman thinking of expanding her small business.

10 Mistakes That Could Destroy Your Expanding Small Business

You have proven your business concept, and sales income is now covering overheads. It's time to take your new business to the next level.

10 Mistakes That Could Destroy Your Expanding Small Business



Once you have navigated the critical first twelve months of trading, you hit another perilous stage in the life of a start-up. 

You have proven the concept, and sales income is now covering overheads. So, it’s time to take your new business to the next level.

But if you rush into expansion too soon, you run the risk of making some potentially devastating mistakes. Here are ten of those mistakes that could bring about the demise of your once-thriving small business.

1. Hiring Too Soon

The most logical way to expand most types of businesses is to hire more employees. More salespeople, for example, should mean more sales. An increase in production staff will lead to increased capacity and generate more income. However, employees require training and management, and, of course, your workers are going to expect a regular income. There will also likely be a time lag between hiring new employees and those new team members generating sufficient income to cover their costs. So, it would be a mistake to take on new employees in anticipation of increased sales. Instead, it would be better to take on new staff gradually, and only when your existing cash flow will cover the employee’s costs for at least a few months.

2. Hiring the Wrong People

One bad apple can wreck a small business. So, try not to rush the recruitment process when you decide that it is time to expand your workforce. First, write a detailed job description for each role you intend to create, and have a profile in mind of the type of person you want to recruit. Then, review resumes carefully and conduct meaningful interviews.  And take up references and complete background checks before you offer anyone a job. You must hire people with the right skill sets, the right attitude, and the right personality. One bad hire could destroy a small business’s good reputation and disrupt the entire company.

3. Failing to Manage the Accounts and Cash Flow

You might be tempted to take your eye off the ball when sales are on target. However, if you neglect the accounts and the cash flow, things could deteriorate rapidly. Credit customers may take advantage of your lax collection procedures, and, if you don’t control costs, they will creep up. Complete and analyze your accounts every month and monitor cash flow and accounts receivable weekly. It would be a mistake to let the bookkeeping tasks fall behind during this crucial business development stage. If you are too busy to keep the books up to date, it would be best to consider hiring a bookkeeper.

4. Taking Customers for Granted

Customers always have a choice. So, it would be unwise to allow success to go to your head and start ignoring your customers’ needs. Continue to make customer service your priority, and continuously monitor the quality of your products or services. An expanding business can sometimes get ahead of itself. Product quality can slip as people rush to meet the increasing number of orders. Loyal customers may forgive the occasional mistake, but persistent poor customer service will lose your customer in the long run. So, ensure that your internal systems and quality control procedures keep pace with the increased demand.

5. Taking on Too Many Commitments

Overcommitting could be a costly mistake for an expanding small business. So, try to avoid making commitments to customers that you cannot meet, and don’t take on financial obligations until you are 100% certain that you will be able to meet them. It would be better, for example, to turn down a significant sales deal if fulfilling that order would delay the shipment of many other smaller orders.  It would also be unwise to commit to larger premises or new equipment before you are sure that increased sales volumes are sustainable.

6. Not Delegating

When you do hire employees, you must learn to delegate. A business owner cannot do everything when their business expands. You will need to trust your employees, and that comes back to hiring the right people. When you allocate a task to an employee, try to avoid resisting change merely because it Is not how you would do things. You might find that employees find better and more efficient ways of completing the tasks that used to be your responsibility.

7. Not Seeking Advice

As a business grows, the need for professional advice increases. You may need legal advice on contracts and employment issues. Your accountant will be able to help you manage your finances and raise investment if it is required. It may also be useful to reach out to business mentors to help you plan and control your business’s expansion. Even the most successful entrepreneurs have advisors. So, don’t try to go it alone; call in the professionals when you need some expert business advice.

8. Failing to Invest in Technology

Your internal processes and systems will probably need upgrading to cope with the increase in business turnover. You will probably need to replace many manual systems with computer software. Your sales order processing system, for example, may need computerizing. Customer relationship management (CRM) software will help you manage your business contacts. As already mentioned, it would be best not to make large-scale commitments too soon. Even so, investment in technology will make the business more efficient, help maintain customer service levels, and save on staff costs.

9. Expanding Too Fast

If a business expands too fast, it can stretch resources to a breaking point. Employees can become overwhelmed to the point that quality and customer service are compromised. Internal systems that used to be adequate can become overloaded. And the need to purchase more and more raw materials to meet increasing sales demand can stretch cash flow to the limit. So, the best approach is to control growth so that resources have time to catch up. Aim to expand in controlled, incremental steps rather than overnight. Then, you can be sure you have solid foundations in place before you begin each stage of expansion.

10. Abandoning the Winning Formula

If your business has survived the first twelve months of trading, your customers must have liked what you have been doing. So, try to avoid making too many drastic changes to the way you run your business and the company culture. Changes will be needed to cope with business growth. However, it would be a mistake to discard the winning formula that got you this far.


The first twelve months of a start-up are often said to be the most critical. However, expanding an already successful small business also holds its perils. So, be wary of taking on staff too soon and taking on too many commitments. Expand in a controlled fashion so that your resources can keep pace with the growth, and don’t try to do everything yourself. Instead, delegate when the job does not require your expertise and seek advice when you need expert guidance.

Neil Savin