5 Costly Mistakes for Growing Companies to Avoid

February 22, 2018


Mistakes are a normal part of starting and expanding a business. Company leaders have a range of issues to consider when embarking on a period of expansion, including hiring, finances and office-space upgrades. Learning from the mistakes of others, instead of falling victim to them, can give a growing company an advantage.

According to the U.S. Department of Labor, around half a million companies are started in this country every year, but few make it past the initial start-up period. In fact, only half of new businesses survive their first five years, and only a third make it to their tenth anniversary.

With so much at risk, growth presents unique challenges that businesses must successfully navigate. Knowing the potentially disruptive issues in advance, business leaders can more carefully position their companies for success, staying focused on increased output and growth, instead of doing damage control. Here are five costly mistakes business owners should avoid:

Hiring in a hurry

When going through a period of growth, it can be tempting to increase staff rapidly. However, hiring employees in a rush can often lead to shortcuts and flawed decision making. Failing to review references or employment history when conducting interviews can cause future problems. Follow standard procedures, conduct thorough interviews and perform background checks to help minimize hiring errors and ensure that the right candidates come onboard.

Assembling a like-minded team

It can be tempting to assemble a team of like-minded people who support company leaders without question. However, varying opinions and ideas can be healthy, sparking valuable conversations that improve the company. If a team member is given leeway to thoughtfully question ideas or processes, that freedom can help promote a positive culture of intellectual discussion and open-mindedness at all levels.

Failing to have financial reserves

A sustained period of growth can require substantial financial resources. Cash reserves need to be available for a variety of needs, including financing the development of larger scale production, improving office facilities, or adding staff. A lack of available cash can cause a company to go into the red before seeing the benefits of any growth.

Strong financial reserves are also necessary to allow for market downturns, failure to meet targets or other unforeseen events. A lack of available cash or access to resources can cause a growing business to stop expanding and halt positive momentum in its tracks.

Selecting the wrong partner

Business owners trying to grow their companies may decide to partner with experienced investors and experts. These backers often provide financial assistance as well as advice and guidance. A financial partner can give a company a valuable boost, but choosing the right one is key.

An investor may expect to have a voice in company decision making, so ensuring his or her experience is genuine and relevant is essential. An investor’s contribution should enhance company leadership and industry positioning, not detract from it.

Overlooking baggage during an acquisition

A quick and tempting way for some organizations to grow may be through acquisition of another company. This strategy can be effective, allowing businesses to expand more rapidly. However, those companies targeted for acquisition may come with their own existing issues or baggage.

Conducting a thorough investigation into the target business is vital, as is planning for after the acquisition, should a merger or buyout result. Taking on unmanageable debt or dipping too deeply into cash reserves can disrupt or prevent growth. With careful planning, acquisitions can help a company grow, but the risks inherent in such a move must be considered.

In short, a successful business, regardless of its age, must accept an element of risk when looking to expand. But with the right approach, planning and leadership, business owners can avoid costly pitfalls, increasing their odds of long-term success.

Eric Bonugli is a district manager and Kay Oder is a Certified Business Performance Advisor for Insperity. They are located in the company’s Austin office. Insperity, a trusted advisor to America’s best businesses for more than 31 years, provides an array of human resources and business solutions designed to help improve business performance.


Kay Oder


Kay Oder has owned six companies, has been a resource to thousands to businesses and brought solutions to help business owners minimize risk, improve business performance and navigate today’s highly regulated and complex “business of being an employer”.

Today, Kay uses the insights gained throughout her career as a speaker, business owner and business advisor. Audiences enjoy her candid, informed perspective on HR related topics as well as her razor-sharp southern wit.

Kay is also a Certified Business Performance Advisor with Insperity, the $2.6 billion business performance solutions provider she has called home since 1993. Kay has consistently been among the company’s top producers during her 20 plus years with the organization, earning Insperity’s highest honors, including the Top Volume, Circle of Excellence and the Chairman’s Club awards.

Prior to Insperity, Kay was the President and Co-founder of Texas Valve Specialists, a supplier in the oil and gas industry. She has also owned companies in the construction, demolition, machining and promotional apparel arenas. She spent four years as a client of Insperity and upon selling her last venture, joined the Insperity team.

From an early age Kay demonstrated an entrepreneurial spirit, beginning at age six when she sold cantaloupes from her parents’ front yard, which she offered three for fifty-cents, with a free puppy.

Kay and her husband, Dale, relocated to Austin from the Houston area in 1996 when a theft occurred in their family: their granddaughter was born and stole their hearts, so they had to follow.

Insperity, a trusted advisor to America’s best businesses for more than 30 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization® solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2016 revenues of $2.9 billion, Insperity operates in 61 offices throughout the United States. For more information, call 800-465-3800 or visit www.insperity.com.

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