The last few years have been hard for retailers. Disruptions from the COVID-19 pandemic forced many businesses to slow or halt operations altogether. According to the US Census Bureau, factory shutdowns created a production backlog, with 38.8% of small businesses facing supplier delays in 2021.
At the same time, consumer demand for many products spiked as people panicked about the future, making it difficult for retailers to meet demand.
Today, retailers face new challenges. The economic recession is making it difficult for consumers to spend more in your stores. Labor issues persist, challenging staffing and even leading employers to cut store operating hours. Competition from online retailers and third-party delivery is impacting sales opportunities and growth potential.
Still, convenience store owners press on.
To be successful, retailers must maintain a level head and make smart business decisions. In his book Smart Growth, Professor Ed Hess said growth is much more than a strategy or a desired result. It is a process characterized by complex change, entrepreneurial action, experimental learning and risk management.
Business owners who understand this and the challenges that come with it are the ones with the best chances for successful growth. He outlined six common mistakes business leaders make that hurt their bottom line.
Getting overwhelmed by growth. Growth is change. Growth requires more processes, controls and people. Too much growth too quickly can create financial, quality and reputational risks that, if not properly managed, can lead to the business’s demise. Keeping tabs on all of these factors can easily overwhelm business owners.
Knowing when to say “no.” Most successful businesses have plenty of new opportunities. The challenge is choosing the right ones. Good opportunities are those that will enhance your company’s strengths and result in a compelling customer value proposition.
Hess said opportunities that don’t fall into that category should be avoided. The problem is that too many business owners never learn to say no and try to do too much for too many, which dilutes their focus and, often, the quality of their service.
Transitioning from owner to leader. When you’re delegating tasks and relying on your employees to drive your business, you must also transition from thinking of yourself as just a business owner to starting to develop as a leader and coach. Evolving toward becoming a leader and coach is challenging because both roles require emotional intelligence, people engagement and the ability to relate to individuals in a way that they find meaningful.
Hiring smart. Hiring mistakes are costly and time-consuming and create quality and financial control risks for small businesses. When confronted with impending growth and labor shortages, hiring managers often panic and hire employees too quickly, making snap decisions based on little data.
Managing cash flow. Many times, business owners can get overly engaged in the joy of growth and lose sight of the need to manage cash on a daily basis. Cash flow management during growth periods is critical because, in many cases, growth requires investments in people, technology, supplies, etc., ahead of the receipt of cash from customers. Thus, there is often a mismatch between expenditures and receipts.
Hess also stressed the importance of cautiously managing your checkbooks, credit cards and online accounts. If you decide to delegate this task, choose the employee you trust the most and set prescribed monetary limits.
Check your payments and accounts every day because frauds do occur.
Understanding that upgrading never ends. The people, processes, structure and controls needed to manage a business with $1 million of revenue generally do not work for a business with $10 million of revenue. Business leaders often learn the hard way that growth means continual change, and as you grow, the solutions that work at one level will most likely not work at the next.
Growing a business is an evolutionary process, Hess said. It requires constant learning and improvement. And if not well planned and managed, it can outstrip companies’ capabilities.
Growth should be a strategic decision only after the risks are assessed. He advised leaders that rather than focusing on growing for growth’s sake, they base their goals around how they can constantly improve their business. When you do this, you will be able to meet the challenges of business growth head-on and with great success.
Elie Y. Katz is the CEO and president of National Retail Solutions (NRS).
