Your Small Business May Be Approaching a Dangerous Level of Growth

Accidental entrepreneurs may not have planned to scale their businesses, but it's happening anyway. If your business is seeing unexpected levels of growth it can be easy to get lost in your “success” and stumble into failure.

Accidental entrepreneurs may not have planned to scale their businesses, but it’s happening anyway. If your business is seeing unexpected levels of growth it can be easy to get lost in your “success” and stumble into failure.

Everyone knows the classic examples of big-name failures in business like Blockbuster, Sharper Image, and A&P. What is rarely discussed is the smaller businesses that quickly started and blew up just to fall flat on their faces just as fast.

Worse, your relatively small size makes you even more vulnerable to failure.

You probably don’t have the cash reserves, inventory, human resources, or even the managerial experience to survive a huge error while you’re growing. 

Don’t fret though! The good news is that unlike large businesses, you can react quickly. The trick is to be aware that danger may be coming and be able to spot the signs of it.

The “Killing Zone” of Business

There is a common term in the aviation industry called the “Killing Zone.” It refers to a time when a new pilot is between 50 and 350 flight hours and is statistically estimated to have the highest rate of fatal mistakes.

My father-in-law, an avid pilot and successful businessman, described it as the time when pilots are just good enough to be dangerous but also have the confidence to get themselves in trouble. His nickname, Wild Bill, is a good indicator of how much trouble he got into during this time (but he survived, so no worries any more).

The point is that a combination of ongoing survival and experience somehow leads to an increase in the likelihood of death (at least for a time).

The same is true of business.

Your Business’s Killing Zone

Unfortunately, there is no set point (revenue, number of employees, time in business, etc.) that any business can look to predict a potential catastrophic event. Your business, like all businesses, is unique and therefore your “killing zone” will be as well.

Yes, we have data in regards to how many years in business many will fail (we’re all familiar with the chart below), but the information isn’t useful in terms of the industry, funding status, economy, location, number of employees, or revenue level of the businesses that failed.

Business Failure Rate According to the SBA SOURCE

With that said, there are some simple indicators that you’re about to break it or make it.

3 Signs That You’ve Entered the “Killing Zone”

Here are three indicators that you may be in your Business Killing Zone. If you find that you can recognize one or more of these

You’ve Begun to Believe That Someone Else Can Do a Better Job Than You

Imposter Syndrome is something that impacts the highest and most capable achievers. The response is simple, you either deal with your feelings of inadequacy and use them to grow beyond your perceived limitations, or you accept them as fact and run away.

Even our own illustrious owner and founder of Scalable.co Ryan Deiss tried to “fire himself” from his own business at one point. Needless to say, it didn’t last and he came back to grow his business successfully.

Here are a few indicators that your business has entered an “imposter” killing zone:

  1. You’ve begun to second-guess important decisions that you know intuitively but can’t communicate in proper “business lingo” to convince your MBA executives.
  2. You’re delegating vital decisions to executives that you have historically made yourself.
  3. You’ve started to think that your care for the business is a liability rather than a strength in running the business.

You’re Ignoring Sales Leads Because You’re Too Busy

Right now the construction industry in Texas, specifically home contractors, are in enormous demand. The real estate industry is booming, people are updating their homes with massive amounts of equity that have turned into home-renovation budgets, and everyone needs pool builders, kitchen remodelers, painters, masons, and more to get the jobs done.

These businesses are so in-demand that some of them are refusing to even quote customers through the end of the year (seven months away at the writing of this article). My company, a media development firm focused on small, local businesses, has been requested to create pop-ups informing customers to “contact us next year” on multiple occasions.

If you are unable to handle the leads that are coming into your business or facilitating growth has become too much of a chore, it says a lot about your business. It says that you’re uninterested in growth or satisfied with your current level of revenue. It says that you’re no longer interested in converting resources (leads) into any kind of revenue and would rather let the competition deal with them. It says that you believe someone else can do your job better than, or at least as good as, you.

Overall, it’s bad. If something isn’t growing, it’s dying. Here are a few indicators that you’re in the Killing Zone:

  1. You’ve cut your marketing budget to prevent leads from coming in.
  2. You have no interest in following up on any leads, whether good or bad.
  3. You have no plans for growth beyond your current level, and if things got slower, you’d probably be happy about it.

You’re Business is Built Around a Trend and You Don’t Acknowledge It

When I was in college in the mid-2000’s there was a cupcake shop called Sprinkles in Newport Beach. For just $6 you could get a pound of cake and frosting after waiting in a line for twenty minutes. High-priced cupcakes were all the fad, and while Sprinkles is still around, the trend is long dead.

Another brand called Crumbs wasn’t so lucky. They began in 2003 with three shops, went public in 2011, exploded to 70 locations by 2013, then closed all of its doors in 2016.

Now you know that trends are bad, but how do you figure out if your core offering is part of one? Here are a few indicators that your primary product offering may not last forever:

  1. When you started there were few, if any, competitors on the market, but now there seem to be new competitors offering the same thing every time your review the market.
  2. Your primary competitors are beginning to sell their products or the businesses themselves to larger corporations.
  3. You have never felt the need to expand your product/service line, even though you’ve been doing the same thing (with little development) over the last 5 to 10 years.

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