Here’s a scenario for you: A business grows steadily for the first few years. It adds customers, hires employees, and takes on larger opportunities. Then growth slows down or stops altogether. There’s still demand for what the company does, but the processes, systems, or management structure that got it this far are no longer supporting continued growth.
Sound familiar? If so, you’re not alone.
Businesses often reach a point where what worked at a smaller size simply doesn’t work as the company grows. When that happens, the most important thing you can do is figure out what’s getting in the way. Lack of sales may be part of the problem, but it’s also worth looking inside the business to see what else may be contributing to the slowdown.
Let’s take a look at five common problems that can stall business growth and what you can do about them.
Problem #1: Your Processes Haven’t Kept Up With Growth
When a business is small, internal processes tend to be fluid and informal. Employees know who to ask when they need something. Managers often stay involved in most of the work. And if a process isn’t written down, there’s usually someone nearby who can walk others through it.
As the company grows, relying on that kind of informal knowledge becomes harder. Two employees may handle the same task differently simply because no one has ever needed to define the process. Add more people or more work, and those differences become harder to manage. They can create delays or extra work and require managers to step in more often.
None of that means the original process was bad. It may have worked perfectly well when the company was smaller. But if employees have to rely on workarounds or individual knowledge to get things done, those processes can start limiting how much additional work the business can handle.
What You Can Do: Document and Fix the Processes That Are Slowing You Down
Start with the problems that already show up regularly. Where does work tend to slow down? Which tasks generate the same questions over and over?
Sometimes the issue is surprisingly simple. Maybe two departments maintain separate spreadsheets with much of the same information, which means every update has to be entered twice. Or maybe routine decisions keep going back to the same manager because employees don’t have clear guidelines for handling them on their own. Neither may seem like a major problem until the volume of work increases.
Talk to the employees who use the process and find out what actually happens day to day. You may find a step you no longer need, a responsibility that was never clearly assigned, or a workaround that made sense once but now creates more labor. In some cases, it may also reveal an opportunity to automate a manual step or use an existing system more effectively.
Fixing those issues can give your business more room to grow without adding headcount to compensate for an inefficient process.
Problem #2: You Don’t Have the Financial Information You Need
The financial information you need to run a smaller business may not be enough as the company grows. Knowing total revenue, expenses, and year-end profitability can tell you how the business is doing overall. But eventually, you’ll have to start asking more specific questions.
At that point, you may need to look more closely at where the business is generating margin. One service line may bring in plenty of revenue but produce relatively little profit, for example, while another is much more profitable. Looking at total revenue alone won’t show you that difference.
That becomes important when you’re deciding where to invest in continued growth. Before committing more money or resources, you need enough financial information to understand where those investments make sense.
What You Can Do: Identify the Numbers You Need to Make Decisions
Think about the decisions you regularly make and what financial information would help you make them. If you’re considering another hire, for example, you may need to know whether there’s enough profitable work to support the added cost and where that person is most needed.
Depending on the decision, you may need to look at profitability by customer or service line, labor costs, margins, or how much capacity you currently have. You don’t need to track every possible metric, but you do need the numbers that are relevant to the growth decisions and challenges your business is facing.
And make sure that information is available when you need it. If you’re making decisions throughout the year, waiting until year-end to understand how different parts of the business are performing won’t give you much opportunity to adjust along the way.
Problem #3: Too Much Depends on Too Few People
If employees regularly have to wait for the same person before they can move forward, that person’s availability can start slowing down the rest of the business.
Maybe an owner still approves decisions that could be made elsewhere. Or a key manager has so much operational knowledge that problems routinely end up back on their desk. Over time, those responsibilities compete with the larger work those leaders need to be doing to move the business forward.
The issue isn’t necessarily how involved those leaders are. It’s whether the company has enough management capacity to keep decisions moving without everything funneling through the same few people. This is a common challenge for growing midmarket companies.
What You Can Do: Add Management Capacity Where You Need It
Pay attention to where things consistently slow down because they’re waiting on a particular person. If the same owner or manager keeps becoming the stopping point, look at what’s landing with them and why. Then decide what actually needs to stay with that person and what could be handled elsewhere. Some responsibilities may simply need clearer ownership, while others may require additional experience or expertise.
From there, you can determine what kind of change makes sense. That could mean developing an existing manager, making another internal hire, or bringing in outside expertise. The important thing is adding the management capacity the business needs without assuming that every gap requires another full-time executive.
Problem #4: You Don’t Have the Capacity to Take on More Work
Sometimes there’s plenty of demand for what a company does, but the operation simply can’t absorb much more work. Employees may already be stretched thin, production may be limited by available equipment, or the schedule may be full. When that happens, hiring can seem like the obvious next step.
But an overloaded team doesn’t always mean you need more people. If experienced employees are spending significant time correcting preventable problems, completing repetitive manual tasks, or working around systems that could be used more effectively, another hire may not create as much additional capacity as you expect.
Before investing in more resources, it helps to understand what’s actually preventing the business from getting more done with the resources it already has.
What You Can Do: Identify What’s Limiting Capacity
Look at where work starts to back up. If orders are consistently delayed at the same stage or employees regularly have to redo work, find out what’s happening at that point.
The people closest to the work can usually tell you where they’re losing time or what prevents them from getting more done. You may find that a manual task could be automated, an existing system could handle work employees are currently doing themselves, or scheduling changes could make better use of available resources.
Once you know what’s limiting capacity, you can decide what kind of investment makes sense. Sometimes the answer will be another employee or additional equipment. In other cases, changing a process, automating part of the work, or getting more out of technology you already have may create the capacity the business needs to keep growing.
Problem #5: Your Systems Aren’t Keeping Up
When businesses first invest in new technology, they’re usually trying to solve a specific problem. That system may work well for years. But as the business changes, employees may find new ways to get things done without anyone revisiting what the system can do or whether it’s still configured appropriately.
That can leave a lot of untapped potential in technology you already own. It can also create problems when the original setup no longer reflects how your business operates today. An ERP that once worked well, for example, may now require manual workarounds or make it difficult to get the information you need.
What You Can Do: Optimize What You Have Before You Replace It
Before replacing a system, find out what you already have and why it isn’t working the way you need it to. Talk to the employees who use it regularly. Where have they created workarounds? What are they doing manually? Which parts of the system are difficult to use or don’t give them the information they need?
Then determine what’s actually causing those problems. The system may need to be configured differently, employees may need additional training, or another part of the process may need to change. In other cases, the technology really has reached the point where it can no longer support the business.
If the current system can do what you need, optimizing what you already have may make more sense than starting over. And if it can’t, understanding what the business needs from its technology will put you in a better position to choose and implement a replacement.
Where to Start: Practical Steps for Addressing Stalled Growth
You may recognize more than one of the problems above in your business. Your challenges may also stem from a combination of several rather than any one issue. Fortunately, you don’t need to tackle everything at once.
Step 1: Identify the Constraint
Ask what is currently making it difficult for your business to handle or support more growth. Look for a specific answer rather than starting with a company-wide improvement plan. That might mean asking:
- Where is work consistently getting stuck or delayed?
- What prevents us from taking on more business today?
- Which decisions are difficult to make with the information we currently have?
- Where are employees spending time that could be used more effectively?
Step 2: Find Out What’s Causing It
Once you’ve identified the constraint, find out what’s behind it. Talk to the employees closest to the issue and look at the financial or operational information that can help you understand what’s happening.
Be careful not to treat the first explanation as the answer. If a team is overloaded, for example, ask why before assuming you need to hire. Is there genuinely more work than the current team can handle? Or is something else consuming capacity?
Step 3: Make a Targeted Change and See What Happens
Choose a specific change and decide what you expect it to improve. Then track whether it actually does. Before making the change, establish:
- What you’re changing
- What you expect to improve
- How you’ll measure the difference
- When you’ll review the results
If the original constraint improves and another one becomes more noticeable, that doesn’t necessarily mean the change failed. Sometimes removing one barrier to growth reveals another one.
Get the Support Your Business Needs to Keep Growing with Manchester
Knowing something needs to change and having the time or expertise to address it are two different things. When you’re already running the business, it can be difficult to step away from day-to-day demands long enough to diagnose a problem, determine the right response, and see the work through.
Manchester RBG gives you access to experienced advisors who can step in based on what your business actually needs. Depending on what’s holding back growth, that may include support with:
- Financial reporting and analysis
- Process and operational improvements
- Management and organizational needs
- ERP and technology optimization
- HR and workforce challenges
That breadth matters because the problem you notice first may not be the one that ultimately needs to be solved. Manchester can bring the appropriate expertise to the issue without trying to force every business into the same solution.
And our involvement doesn’t have to end with a list of recommendations. We work alongside your team to put changes into practice and can stay involved as new needs emerge.
If your business has stopped growing and you’re not sure what needs to change, talk with Manchester RBG today.what needs to change, talk with Manchester RBG today.
Key Takeaway: Businesses can stop growing when their processes, financial information, management capacity, operational capacity, or systems no longer support the size of the company. Identifying what’s creating the constraint can help you determine what needs to change before you push for more growth.