Common mistake entrepreneurs and business leaders make when trying to scale a business before they are ready. There are three factors you need to master first, before even considering scaling your business or you will be dead in the water.

It is only natural for any business owner or entrepreneur to want to build their new business to a big business as soon as possible. One sure way of shooting yourself in the foot before the race is to try and scale the business without knowing all the facts of scaling a business correctly.

What Is The Purpose of Your Business?

The purpose of any business is to acquire and retain customers. Sales and profits are a by-product once you acquire customers. Before you even consider scaling your small business you need to master the art of three key factors which are: Client Attraction, Client Conversion and Client retention, only when you have mastered the art and created systems for all three can you think about scaling your business. You need to be able to understand your customers, their needs and wants and being able to fulfill them. But that’s not all you then need to really, really need to look after them to keep them coming back for more and bringing in friends and family because they are so happy with your service and the way you look after them also know as the customer experience.

Easier said than done but it has to be done or you will fail. In one of my rolls as Turnaround Practitioner I have seen many failures since 1989 for the very reason that I am writing this article to warn entrepreneurs and business leaders alike of the dangers scaling a small business before you are really ready and know what could go wrong. Only once you have mastered your small business with the three key factors are you ready to consider scaling up for the big times.

Life Time Value of Customers

You have to understand the life time value of your customers and their friends and family they influence to make or break your business especially with social media and a few tweets. The trade offs between, Customer Attraction, Customer Conversion and Customer Retention have to be aligned and fine tunes to work together. I see this too often as three separate departments each competing against each other as opposed to working together as one in harmony, looking after the interests of the customer. It is too easy to write a cheque to pay an ad or marketing agency to help you bring in more new clients when you are not even making an effort to look after the ones who have made purchases from you.

Private Client

About two years ago, I was one of the speakers at well-known o2 Arena in London, talking about the importance of customers and that once more the customer is king. Other speakers who were like Richard Branson and loads more when I was asked by a Managing Director of a group of nursing and care homes if I could help them build their lead generation for acquiring new clients. After asking a few question and getting some more information about his business, I agreed to spend up to three days (paid days) to explore the possibilities of finding the right solution to grow their 34 nursing homes for more new clients.

New Customers Coming in The Front Door & Back Door Left Wide Open

It only took me two days not only to solve a problem which they felt they never had but also fill their future lead generation pipeline for more new evergreen clients for life. I often get asked to help companies fill their bucket with fresh rain water only to discover they have holes that are leaking the water faster than they can fill fresh water at the top. No, no, I know what you’re thinking, no nothing to do with rate of people dying in care or nursing homes. First we had to fix the leaks which according to them were not the problem in their opinion as the whole industry operates in the same way. It's was more new clients we need was their answer.

You see the management and staff were all focused on bringing in new clients to fill the beds but once they got the clients signed up and in care the focus shifted to bringing in more new clients, which by the way is common practice throughout most industries including yours I am willing to bet?. The nursing homes were only looking at things tactically but were not even aware of the strategic opportunity that was there for future evergreen clients. Each client had a family and loved ones who cared about the welfare of the member in the care home.

The Game Changer

Anyone can create and deliver a lead generation system for most businesses but getting them to create and deliver a sustainable growth is another story for another article. The game changer for my client with the nursing homes was right in from of them 24/7 but they could not see it. So we mapped out a mind map for five clients who had just arrived in the last seven day by asking them about their family, brothers, sisters, children, cousins, uncles and aunts, close family friends and their partners along with age of each person. Then we got the nursing home to provide pre-printed cards as many as they wanted to post out to friends and family stating that is the new address where they will be staying and they could phone in or call in to visit them anytime. All the postage paid by nursing home. Each visitor was welcomed and personally greeted by staff and offered tea or coffee. Each visitor was asked to rate their visit experience on a 1 to 10 scale each time they came. If the scores were below 8 then they were asked to ask the visitor what needed to be done to get them to a score of 9 or 10 and the comments fed back to the directors. There were a number of other customer experience processes put in to place for the visitors, staff, management and the person in care.

Pays to Listen then Act – Most Just Listen & Do Nothing

It took the nursing homes 14 months before they manage to get 60% of visitors scoring them on 8 to 10, this was a major game changer they began to see client referrals slowly increase due to the hard work they had put in over the 14 months by listening to customers and their loved ones.

Once the existing homes were fine tuned with the holes plugged at the bottom of the bucket then they were able to focus on scaling the business by bringing in new clients via the evergreen client attraction system for sustainable growth and expanding with more care homes. It has been over two years since our initial strategy session and the client who now have just over 63 nursing home and still growing with sustainable growth by looking at the whole picture and having an evergreen strategic plan to grow their business.

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Moe Nawaz: Author - Speaker -  Strategic Advisor & Mentor to FTSE 100 Leaders

    2 replies to "Growing A Small Business Too Fast Can Choke or Kill It"

    • Dennis Wagoner

      The Three Keys of Client Attraction, Client Conversion and Client retention are indeed very important to any businesses. Unfortunately the last key called Retention is overlooked or ignored entirely by owners and staff alike. More businesses need to understand Client Retention and the Lifetime Value of their customers, as it has been shown time and again to be cheaper to retain clients than to attract them. Another gem of particular importance is your comment of the Circle of Influence a customer has, and its impact on the bottom line of a business. If you treat your customers well they may tell one person, but if you treat them badly they tell everyone.

    • Lacie Garcia

      Service after the sale is key to all businesses of they want to keep a steady client base.

      I run a lawn care service and in an effort to get more clients I offered my workers a bonus to sell at least one more service to each client. This backfired in a major way.

      Instead of selling more, I actually lost clients. I did a client exit mail survey and found my clients felt pressured on each job visit. The bonus I put on selling an extra service created a situation where workers got too pushy.

      Just thought I’d share my story on how I choked my business trying to make it grow.

      A company needs new clients, but it pays to treat the existing ones like the important part of your business that they are.

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