The 7 Deadly Sins of Growth Companies

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
Will be used in accordance with our Privacy Policy
The 7 Deadly Sins of Growth Companies
Image credit:
Guest Writer
Co-founder and CEO, Infusionsoft
4 min read
Opinions expressed by Entrepreneur contributors are their own.

Exiting startup mode and transitioning into the growth phase can be a trying experience for entrepreneurs. Growth companies are beyond the white-knuckled survival days and playing a different game. There’s a lot more to know -- and a lot more on the line.

With that transition to the growth phase comes a whole litany of potential pitfalls -- what I call the seven deadly sins of growth companies. I’ve survived several of these while building Infusionsoft, and I have the scars to prove it.

Business owners in any phase need to stay abreast of the threats they face, but for growth companies, there are certain things to look for so they don’t stall, backslide or even die. Here are the seven deadly sins of growth companies.

1. Hiring the wrong leaders.

If you’re not hiring leaders that align with your company’s purpose, values and mission, you’re asking for trouble. As Scott Martineau, my co-founder says, “Hiring these ‘misfits’ is like taking a jackhammer to the foundation of your business.” As your business grows, it can be tempting to make an exception for a hotshot prospect or a seasoned exec, but it’s not worth it in the end. They will inevitably cause chaos you don’t need.

Related: 5 Common Entrepreneurial Mistakes There Is No Excuse for Repeating

2. Hiring people with too much experience.

Remember, a growth business with roughly 25 to 100 employees and $3 million to $10 million in revenue is still not a massive enterprise. Bringing in people who lack an entrepreneurial spirit can often backfire in this stage. The trick is to build a team that blends the right amount of experience and entrepreneurship. It can be a difficult task, but one to stay conscious of as you grow.

3. Being cheap with payroll.

This is the flip side of hiring people with too much experience. I’ve run into a lot of business owners that don’t want to pay for the experience the company needs. If you don’t mix in a little bit of “been there, done that,” you might save on payroll, but you’ll pay for it in the school of hard knocks. And sometimes those hard knocks put you out of business.

Related: 10 Startup Mistakes You Can't Afford To Make Again

4. An unwillingness to invest in systems.

I remember how shocked I was by the price of telephones, software, computer equipment and furniture as we moved through this growth stage. I bitterly and regretfully wrote those checks, only doing so once I saw it was absolutely necessary. While that reluctance is probably a good thing (because spending too readily will drive you to the poor house), there were times I stunted our growth because I would not purchase big-ticket items, as a matter of principle. That stubbornness was not helpful.

5. Not enough cash on hand.

Growth consumes cash and the faster you grow, the more cash you need. I don’t know how many entrepreneurs I’ve met who are morally opposed to using debt or equity financing to grow their business, yet they expect to grow 100 percent per year. It won’t happen. You need to either raise capital or slow your growth. If you try to grow fast without sufficient cash reserves, you will kill the business. To me, this is the saddest form of business failure.

6. Failure of sales and marketing to adapt.

The growth-phase entrepreneur cannot be a one-trick pony, relying on one strategy, one partner, one advertising source, one star sales leader or one industry factor. One is a very bad number in customer acquisition. Evolve the marketing machine or run the risk of going back to an earlier stage -- or going out of business altogether.

Related: Minimize the Impact of Your Mistakes With These 6 Strategies

7. Lack of a strategic plan.

Once you move past 25 employees, the lack of a clear strategic plan can lead to well-meaning employees running in 25 different directions. Either that, or you’ll have 25-plus employees who are stuck in one place, unwilling to move or innovate for fear of being “out of line.” Either way, the lack of a clear strategic plan will hamstring the company. Leadership needs to clearly communicate where the company is headed, and employees will thank them for it.

For those running small businesses, the growth phase can be as exciting as it is challenging. The key is know the things that can inhibit your growth and be smart about overcoming them.

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Starting, buying, or growing your small business shouldn’t be hard. Guidant Financial works to make financing easy for current and aspiring small business owners by providing custom funding solutions, financing education, and more.

Latest on Entrepreneur

Entrepreneur Media, Inc. values your privacy. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site (both directly and through our partners). By continuing to use this site, you are agreeing to the use of that data. For more information on our data policies, please visit our Privacy Policy.