Is Fast Growth Always Bad?

(544)

Some websites seem to plug along and slowly grow to prominence, while others hit the big leagues almost overnight. However, conventional knowledge suggests that very fast growth can be dangerous and even devastating for an ecommerce website. Here are a few of the dangers you might encounter:

  1. Outgrowing your infrastructure. If your servers are crashing from customers even though you were well below capacity yesterday, you are probably growing too fast. It takes time to add the infrastructure that you need in order to take advantage of growth and make profit from it. 
  2. Outgrowing your staff. If your ecommerce website is like many, you are operating with as little staff as possible—sometimes just you, the owner. It takes manpower to respond to queries and manage a website, trained manpower. If your website takes off overnight, you’ll be scrambling for employees to make your workload manageable.
  3. Higher overhead cost. One of the advantages of being small when it comes to ecommerce is that you can keep overhead very low. This in turn leads to low prices for your customers. This is one of the main reasons that people patronize ecommerce websites, so losing this advantage might mean losing all of your new customers.
  4. Additional expenses. All of the things that we mentioned above have one thing in common: they cost money. However, when you grow quickly you may have the funds to address these new concerns, which means that you make end up closing your business as a result of rapid growth.
  5. Bureaucracy. You may be tempted to hire a staff to do the hard work and to merely act as a manager when your company is growing quickly. Except even management tasks can be overwhelming, so you might add a few managers here and there as finances allow. Before you know it, your small, sleek ecommerce website is a big bloated corporation, just like the ones you went up against in the beginning. Ouch.
  6. Overdependence on one player. If you begin to expand, you may have a supplier or lender who steps in as your ‘hero’ and saves the day. In fact, they may become somewhat of a go-to hero, because you turn to them whenever your ecommerce website needs something. While it is good to have people around you that you can depend on, avoid making one of them work constantly to accommodate you. You’ll become overly dependent on them and lose alternatives, while they will eventually get annoyed enough to sever the relationship.
  7. Overbearing loans. Once your ecommerce website begins exploding, you might be tempted to take out a loan to finance all of this growth. In fact, it can be easy to get a loan when you have sales and demand through the roof! However, you still should be careful about terms and interest rates, and take out only the amount of money that you know you can repay. Many ecommerce websites overextend themselves at this stage and end up unable to pay their bills.