Growing Your Business? Keep these challenges in mind! 

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Growing Your Business? Keep these challenges in mind! 


Every booming startup reaches a point where the team has to undertake growth measures. As operations start to standardise, startups get more acquainted with their resources and market. This exposes them to new opportunities they can pursue for growth. Growth is a positive thing, but there are certain challenges that entrepreneurs and managers need to keep in mind. It is easy for a firm to overshoot its capacity to manage growth in ways that can diminish the venture’s sales, revenues and profits.


Here are four common challenges a growing firm faces on a daily basis.


Cash flow management

Managing cash flow has a substantial pith when your startup is growing, and you will find every reading material stressing on it. As a startup grows, the cash flow – both in and out – for operation grows. It is important for startups to manage the cash in hand to maintain its liquidity. We have heard tales about entrepreneurs taking mortgage and extreme measures to deal with potential cash flow shortages. Some businesses even restrict their pace of growth to avoid the challenges of cash flow management.



While some firms choose to raise equity capital or rush to the bank for loans, others opt for slow growth using their earnings. Dave Schwartz, founder of Rent-A-Wreck (one of the best-known neighbourhood car rental companies in the U.S. and global market) grew his company organically through profits rather than debt or investment capital. He says, “One of the main things I tell people starting out is not to grow too quickly. Often it’s better to grow slowly, and when you do expand, try to grow with cash flow.”


Price stability

Price competition can set in too. When you grow, you are looking to set your foot in your competitor’s market, and that can be of bigger firms’. A startup cannot compete directly in terms of price against the bigger fish in the market. For instance, Milkmandu, a dairy firm based in Kathmandu, began by selling its products to a niche market of expats and foreigners as it was not equipped to serve a bigger market and compete against price levels of bigger firms. After a couple of years of serving that market particularly well, it is now expanding to enter to a larger wholesale market with a new facility that will equip them to provide their products at a lesser price.




It is important for a startup to maintain price stability during growth. The best thing for a growing startup is to avoid price competition by serving a different market and doing a good job at it.


Quality control


Maintaining the level of quality and customer service becomes a huge challenge at the stage where a startup needs to handle more transactions with increase in the number of customers, suppliers and other stakeholders. In order to cater to increasing demands while maintaining quality control, startups need to build their infrastructures and hire additional employees. It becomes difficult to find the right time to do so. You will find yourself in a difficult position where you’re trying to justify the rationale of adding new employees or getting new office space until the need is present. But if you wait till the need is present, you might not have the resources required to serve new customers either.  It’s a dilemma that has no perfect solution. As a manager, you need to plan and weigh out feasibility of the growth options before choosing the best way possible.


Capital constraints

Regardless of the industry, startups require capital to fund their growth plans. At first, startups usually begin with low capital investment. But when things hum forward, the need for capital gets higher. The amount of capital requirement varies among businesses depending on their plans. When JAMA Nepal, a leading clothing store, decided to open a physical store to cater to their customer demands after having operated through Instagram, they needed considerable amount of capital to rent a space and design the store. They collected the required amount from investors in their personal circle.



Startups can opt to raise capital for growth by generating funds internally, through a bank, or from investors. Without the money, growth will be obstructed. Only when you are able to raise capital will your growth plans proceed.


Bringing it all together

Entrepreneurs and managers worry about growth as they question their startup’s capacity and wait for the right time. You definitely have to re-think your options again and again before taking the risk. The decision to take a certain growth measure can be your massive breakthrough or the cause of your downfall. So take the time to plan, consider the challenges and make your decision. As James Cash Penney, Jr., founder of J. C. Penney stores, once said, “Growth is never by mere chance; it is the result of forces working together.”


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