Don't Ignore These 3 Principles When Your Company Is Growing Fast

There are ways to help your business ride rapid growth without careening out of control.

Startups are supposed to grow -- fast. Yet in the race to gain customers and appease investors, growth can become an all-consuming obsession. A “growth at all costs” mindset may work early on, but at some point in your business's evolution, prioritizing it over everything else will become a dangerous strategy. The reality is, companies that are constantly acquiring customers need teams and processes that are capable of handling increasingly complex challenges. If you can’t develop those teams and processes fast enough to meet the challenges, things inevitably start falling apart. And once growth accelerates, it’s extremely difficult to keep up.

Looking for trouble

Every company is different, but there are a number of universal indicators that a business is scaling too fast. Sometimes, they’re subtle: Team members are burning out, outflow and profit margin ratios are off, or you gradually start missing certain success metrics. Other times, they’re obvious: You haven’t achieved consistent profitability, or you’re hiring despite losing money every quarter.

Most leaders can recognize the signs relatively early on. Whether they choose to acknowledge them and reverse course is a different story. Some do. In the early 2000s, Larry Page got rid of Google’s entire middle management staff, but quickly realized that  one executive per 100 engineer wasn't enough to handle Google’s astronomical growth. As you may know, Google made it.

But there are also countless examples of companies that didn’t. Maybe you haven’t heard of Crumb’s Bake Shop. It went public in 2011, with shares priced at $13, and closed its doors three years later. Zynga, developer of the once-uber-popular online game Farmville, decided to IPO in 2011 on a wave of millions of downloads. By 2013, it had lost two-thirds of its value.

To avoid the fate of these and other companies that grew too big too fast, keep the following principles in mind.

1. Your team is made up of people.

The key ingredient of every great company is great people. If you can get the founding team and your initial hires right, everything else tends to fall into place. But even if your founding team is made up of rock stars, hyper growth can put immense pressure on a company, testing you in new ways. During this period, leadership must be sure to give all team members -- from the earliest employees to the latest hires -- one of the most powerful incentives in the business world: recognition. Recognize positive behavior when you see it, no matter how simple or expected. A stage of rapid growth is a defining period for your company, and it provides an opportunity for you to create a culture capable of withstanding adversity. Frequent, authentic and personalized recognition -- whether in company wide meetings or privately via email or chat -- makes employees feel their hard work isn't taken for granted. If you prioritize employee recognition, you’ll be in good company. Many companies on the Fortune 100 Best Companies to Work For list have made it a focus. Hilton, for example, gives managers a recognition calendar that highlights 365 ways to thank employees throughout the year.

2. It’s possible to look too far ahead.

Your goals are ambitious, and your vision of the future undoubtedly plays a big role in driving you forward, but periods of high growth demand your full attention. Don’t just focus on where you hope to be in five years, or you’ll miss opportunities and needs that are right in front of you. Securing investor money, closing sales, investing in technology and identifying new hires and strategic partners are steps you can’t skip if you want long-term success.

Webvan, a grocery delivery startup, learned this lesson the hard way. The organization grew quickly and expanded its business before first seeing success with its business model. The result? It wasn’t able to cover the day-to-day costs needed to stay afloat and ended up filing for bankruptcy, laying off 2,000 employees and closing its doors.