Growing your business from a humble startup into a global corporation is a goal that we all aspire to reach at some point in our lives, but very few of us understand the implications it carries. A large company has more things to manage and dozens of pitfalls to avoid. The slightest misstep could cause catastrophic damage to your entire business that will completely destroy it.
It’s important that you understand these pitfalls before growing your business. Hold onto your profits, keep an eye on your employees, and study these common issues that a business encounters when it wants to spread its wings. Remember that knowledge is power when it comes to managing your business, and the more information you collect the less likely you’ll see the day where your business comes crashing down around you.
Things like SOX Compliance are incredibly important when it comes to managing your business. You want to stay out of the way of the IRS and let them do their jobs, and you want to stay clear of their radars. Ensure that every single penny that comes in and out of your business is recorded. The more legitimate the records are, the less likely the IRS will come knocking at your door and shutting down your business. Don’t ignore taxes, keep records of everything, and be honest with your deductions.
If the IRS spots you making massive deductions for “business meals” and travel then that’s a good enough reason to knock on your front door and ask for the receipt or a record because they will automatically assume you’re abusing those deductions for personal enjoyment. Don’t even claim your business vehicle as 100% business use unless it’s a transport vehicle. Keep a separate personal vehicle or maintain a detailed mileage log and purpose for each trip.
Spreading Too Far
It’s very tempting to encroach on the territory of your competitors. Let’s say you’re selling a widely used product such as an office-grade keyboard. Assuming you have good success in that sector, you may want to invest resources in breaking into the video gaming market. However, if you’ve spent years perfecting the perfect economical keyboard for office use, then what makes you think you know about gaming?
Before you spread into new waters, make sure you do ample research and hire professional help from figureheads that know their stuff. Don’t try to take on too many markets at once and cover all your bases as you conquer them.
Just because you have a thriving business, it doesn’t mean that you’re going to need twice as many employees. In fact, most companies grow because they have the perfect amount of employees to balance the cost of hiring with the profit that you’re making. If you’re preparing for expansion, then it seems almost natural to hire an extra employee or two to manage the extra workload, but that’s a sure way to make a dent in your budget.
Take it slow. Don’t hire a new employee unless absolutely necessary because you don’t want to capitalize on a growth spurt too early. You may end up making less profit and doing less work than before, so that makes your extra employee a waste of effort, time and money.