Category: Home Based Businesses >> Running a Successful Home Busines

Avoiding Business Busts


A pattern that is all too common in the home business arena is "too much too soon" or trying to expand the business before it, or the owner, is ready. Doing this is hazardous because the business can grow so fast that the owner is unable to handle, or is unaware of all the problems associated with expansion. All businesses plan to grow, however, doing so too quickly and without a plan for the increase in business spells trouble.


You may hire too many employees, rent expensive facilities or start untested products and services. All of these things can create a challenge that goes beyond the capabilities and experience of the current staff. You can easily run into cash shortages due to rising expenses resulting in what is commonly known as a "company hemorrhage".

Indications of Trouble and their Solutions
The first indication is that you are acting on impulse rather than basing your expansion on market research and studies. Sometimes the business owner chooses to attempt an expansion of the business without seeing if the company is capable of handling the expansion, lunging forward to grasp the assumed market opportunity. There may be too few or too many employees, expensive equipment purchases and rental of facilities to accommodate the perceived needs of the new business. It is necessary to do a market study to get an idea of the pros and cons of expansion, then plan how best to proceed.

A common mistake made is the utilization of loans to fund expansion hoping to repay the loans with the assumed profits from expansion. The cash flow of the company prior to expansion is consumed and slowly diminishes regardless of the amount of increased sales. The profits will seep through the cracks created by the increased expenses.

Losing contact with your base employees is another danger faced when expanding. These people are the main ingredients of the company and the strain can cause them to make critical decisions without the owner's consent. Mistakes made by such decisions can prove disastrous.

The need for reviewing new responsibilities becomes apparent but serves to take the focus off of the basic functions of the company. More importantly, the oversight of these duties could cause the loss of a potential or regular client.

With expansion comes the increased potential for customer complaints and the breakdown of customer service and support. This truly creates disaster and leads to failure for the business.