More sales, more customers, more revenue, more locations—it all sounds pretty good. And legends of the Silicon Valley “rocket ship” or “unicorn” that became a billion-dollar business overnight are certainly appealing.
But what doesn’t make the headlines (at least not as often) are those companies that bit off more than they could chew. So while everyone wants to be the next Tesla or TikTok, they tend not to worry about becoming tomorrow’s Crumbs Bake Shop or Wise Acre Frozen Treats, both of whom had to close up shop because they took on too much too quickly.
So what’s the right pace at which to grow? How do you make sure you don’t collapse under the weight of your rising expenses? Surely there’s no one-size-fits-all answer, but there are a number of practices and pitfalls to be aware of so that the next time you’re thinking of opening a new storefront or contracting with a bigger supplier, you’ll know if the moment is right.
So let’s dive in and review 19 things Canadian small businesses can do to grow their businesses sustainably.
1. Think in phases (with a company roadmap)
Entrepreneurs are often bursting with ideas—and, let’s face it, the impatience to make them happen. That ambition is a good thing, but to grow sustainably, it’s important not to spread yourself too thin.
To pace things out, consider designing a roadmap in which your company’s growth trajectory is thoughtfully (if provisionally) mapped out one phase at a time. With a well-articulated growth plan to guide you, you’re less likely to sprint, and consequently stumble, out the gate.
A phased approach also allows you to take advantage of your size at each stage: when you’re small and nimble, you can experiment with different ideas in the market while trying to find your audience. Then when you start to gain traction, you can formalize product lines and build out operations. As owner of a thriving battery company (and Driven customer) François Byrne puts it, “For a small company, innovation is the way you stay competitive, because the speed at which we can move is twice as fast as these larger companies. Speed is really our only advantage, so we have to capitalize on it.”
So don’t try to do it all, least of all right at the beginning. Instead, take advantage of your size while focusing on the next one or two most logical steps. And if you’re anxious to make it all happen tomorrow, take a deep breath, look at your roadmap, and tell yourself, “one day.”
Learn more about how Byrne leveraged his company’s small size to pivot his product fast.
2. Invest in marketing and sales
Nice new facilities you’ve got there! And a great new piece of machinery. But with all that extra production capacity, have you invested in growing your customer base to match?
The point is, if you’re going to beef up supply, you need to make sure that demand is going to scale with it. The “if you build it, they will come” school of business simply does not work.
We spoke to David Fuller, business coach, author, and President of the Professional Business Coaches Association of Canada, who agrees.
“We had this client that built a website. And after two weeks, they sent an email to one of our team members and said, ‘Okay, we built the website. Why haven't we sold anything yet?’ People don't always realize that there's a lot of work involved in growth. We have this image of what we're going to do, but we’re not prepared to put in the work to make it happen.”
For some businesses, that means hiring sales people. For others, it means increasing your marketing and advertising budget. And for most, it means both.
3. Lock down supply
If supply without demand is a fool’s investment, the inverse is also true. Or as we like to say, “If they come, you better have built it.
Put differently: the last thing you want while experiencing growth in customer demand is not having the goods to deliver. And that means making sure you have multiple, reliable, and (ideally) scalable suppliers to help you fulfill orders quickly.
In today’s supply chain climate, however, ensuring fast and sufficient supply can be a tall order. As Byrne describes it, “Because of how slow supply is moving these days, I need to purchase things four to six months down the road. And best case scenario is I’m getting paid in month seven. That's a huge amount of stress on our cash flow.”
What did he do? Turn to Driven. That way, when you need to pay for inventory or components well before your customers pay you, Driven can help bridge the gap with funds to keep the lights on.
“There’s a cost to borrowing the money for sure,” says Byrne, “but it’s worth it if you know that the sales are going to come in.”
4. Don’t lose your core audience in pursuit of new ones
Growing a business often means going after new markets. But if you change your brand or product too much in an effort to do so, you risk drifting too far from what your most loyal customers love about you.
So how do you win new markets? In a word: segmentation. Rather than change your offering from top to bottom, consider breaking your audience up into different groups and marketing your wares accordingly—speaking as best you can to the unique wants and needs of each. That means diversifying your marketing tactics (and even product lines—see next item) to resonate with different segments. Sometimes you can manage that under the umbrella of a single brand, and sometimes it means splitting things up.
In short: go niche! It’s fruitless to make a single ad campaign speak to everyone and no one at the same time, and much more profitable to connect with specific audiences more deeply.
5. Invest in Product Diversity (And Beware of Trends)
As a rule, it’s important when scaling businesses to invest in a diverse suite of products. Otherwise, you put yourself in a risky “all-or-nothing” situation.
Take it from Crumbs Bake Shop, a once-small cupcake operation that skyrocketed fast and then blew out like a bright star.
The NY-based company started with a single shop in the Upper West Side in 2003, where their incredible success encouraged them to quickly open new locations across New York and other US cities.
In the short-term, the plan seemed to work. By 2010, they were hailed by Inc. Magazine as one of the fastest-growing companies in the US. In 2011, they were acquired for $66 million, after which they went public.
But by 2014, their shares had fallen from $13 to $0.15. Later that year they closed all 48 of their stores. And after a few attempts at a revival, they were done for good by 2016.
So what happened? The short answer is that Crumbs both literally and figuratively put all their eggs in one basket: Crumbs was riding the wave of an official cupcake craze, and they invested in it hard. But between the inevitable rise in competition and people eventually moving on to other things, Crumbs was caught with enormous operating expenses and a shrinking clientele.
So watch out for trends and make sure to diversify your product line. That way if people get bored of crumpets—and they will—you have English muffins to offer instead (yes, they’re different). If Starbucks only made one kind of coffee, do you think they’d still be here today?
There’s another lesson here as well, which is that there’s more to growth than simple expansion. While Crumbs relentlessly focused on expanding their retail footprint at great expense, there were likely other kinds of growth opportunities that passed them by. Wholesale? Ecommerce? Door-to-door deliveries? To thrive long term, you can’t just open up more and more stores that do the same thing—consider growing your business in other, less margin-eating ways.
6. Diversify your channels
As with product, so too with channels: diversity is a kind strength. Take it from Zynga, the social media game developer famous for the popular time killer known as FarmVille—a game so addictive it reached 10 million daily active users within six weeks.
Yet though they grew rapidly from 2007 to 2009, the cost of advertising on Facebook—their key to attracting new users—shot up as more and more companies started doing it. Add to that the fact that Facebook suddenly began tweaking its algorithm to help personalize news feeds (or filter out video game spam, depending on how you look at it) and Zynga’s dependence on the social media giant became problematic.
Though the company is still ticking, their one-channel dependency forced them to lay off more than 30% of their employees between 2013 and 2014—nearly 850 people.
The lesson? Invest in marketing, sales, and other growth tactics along more than a single channel. Because if that channel changes how it operates, you might get squeezed.
7. Ensure quality and consistency
Whether you’re expanding to new locations, purchasing larger equipment, or contracting with more large-scale suppliers, every change to a business poses a small risk to the quality and consistency of your product and customer experience.
One way to offset that risk is to document your product standards, service policies, and brand guidelines to a T. That way, you can make sure your customers get the same great Acme Muffin (and Acme Muffin experience) whether they’re in Halifax or Vancouver.
That isn’t to say that you can’t evolve your products, services, and brand as you go. It just means being intentional about it rather than letting your standards slip. In short, ask yourself: will growing my business in such-and-such a way compromise the quality or consistency of my products, services, or brand? How can I ensure that it won’t?
8. Enshrine the company mission
It’s not just the customer experience you have to define: it’s also your company’s mission, vision, and values.
As your team grows, it becomes increasingly important to put these fuzzy sorts of things down in writing so that they’re not just in your head. Because without these kinds of constitutional statements, everyone is going to have their own, slightly different idea of what the company is about. And these sorts of misalignments can lead to disjointed strategies and contradictory initiatives down the road, inhibiting progress in the long run.
Even worse, growth without a well-defined mission to guide it can lead to slippages in company purpose altogether: over time, your business can turn into something very different from where you started off—something you might not want to be a part of.
9. Don’t twiddle your thumbs
There’s such a thing as growing too fast, but there’s also such a thing as dawdling. Growing “sustainably” doesn’t mean being idle, in other words: if you want your business to stay healthy, you have to take action while the going is good. The last thing you want is for opportunities to pass you by only to get snatched up by the competition.
Seizing opportunities, however, sometimes costs money that you don’t have—and that means borrowing funds upfront. Because without those funds, you might not be able to get that perfect new storefront that just became available, or make that big public splash in time for the holidays.
In short: you don’t have to move fast, but you do have to think about what’s next every now and again. Otherwise, you may miss your moment to take the next step while the competition nibbles away at your market share. Sitting still isn’t an option, because the world will change around you.
As jewelry store owner (and Thinking Capital customer) Marindo Kuy tells it, “If you compare year one to year nine, every year we adapted. Maybe that’s the reason we’re still standing.”
10. Know how much to borrow (and why)
If you’re going to borrow money, however, it’s important not to borrow too much. And there’s no better way to do that than with a thorough budgeting of how you plan to spend your loan: How much is going towards marketing? New hires? Product packaging? Office space? What is the strategy or reasoning that justifies each expenditure? Because if you borrow more than you need, not only will you be paying extra fees or interest on the loan—you’re also more likely to spend those extra funds on inessentials just because it’s there.
Expert David Fuller agrees: “I’ve sat on a few company boards over the years. And you know, these big organizations, they budget. But small businesses, we don't budget—we just go along and think, ‘Okay, based on the economy right now, I'm going to be either up, down, or flat and proceed accordingly.’ And so one of the best things that small businesses can do, especially these days, is to start doing some real planning.”
Fuller doesn’t just mean the big picture, long-term roadmaps we spoke about above (see point one). He also means getting real about next steps.
“If a small business really wants to grow or get profitable or achieve change, they need to be thinking shorter term—they need to be thinking in terms of 90-day plans. Like, what is it that I can do in the next quarter? What are two or three things that will move my company forward in the next quarter?”
Not only does that kind of short-term thinking make you get serious about dollars and cents—it also forces you to focus your efforts.
“Entrepreneurs are always exploding with ideas, so much so that it can be a problem… but when small businesses can come up with these focused 90 day plans, they can do as much in three months as their competition is doing in a year or two.”
11. Deepen your cash flow expertise
Another way to know how much to borrow at any given time—enough to take you to the next step, not so much that you’re incurring undue risk—is to have a crystal clear understanding of your cash flow situation: how much you have now, how it’s trending over time, and how much you can expect to have in the future.
By having a better sense of your cash flow at any given point, you’ll know how much you may need to supplement it with a loan in order to unlock the next step in your company’s growth—and not a penny more.
Learn more about how to set cash flow management on auto-pilot with Cash Flow Advisor / Cruise Control.
12. Invest in staying motivated
As companies scale, it can be hard for business owners to stay close to what they find most satisfying in their work. (Maybe you got into web development because you love graphic design, for instance, but all you do these days is manage a team or woo investors.) Over time, that shift away from what you find meaningful can kill your motivation and inhibit the company’s growth long term.
As François Byrne says, “I think a lot of people get into entrepreneurship and think that it's going to be money, money, money. And there will be money. But I don't think money is enough motivation to power through your business challenges on a day-to-day basis. You have to have a real interest in what you’re doing.”
Read Byrne’s story here.
Fortunately, there’s a way to get back to what you love—namely, by hiring people to take on those other tasks for you. It’s your business after all, so you don’t have to play the traditional CEO if you don’t want to.
By designing your role more deliberately—and offloading the tasks you don’t like to others—you can keep the work meaningful, motivating, and humming along productively.
13. Invest in growing as a leader
One way a lot of young businesses fail is that their leaders are simply too inexperienced to handle the increasing complexity that comes with it. Because a large business isn’t just the same as a small one with more people—it’s a different beast altogether.
One key way to prevent that kind of early success from blowing up in your face is by investing in your own business skills: that means coaching, formal classes, online courses, advisory boards, mentorship networks—anything to keep you learning, listening, and growing as a business leader.
14. Watch out for complexity, bureaucracy, and redundancy
Growing your team can help you take on bigger projects and distribute the workload, but it can also add complexity, bureaucracy, and redundancy to the way you do things. In short, don’t just throw more people at a problem: be crystal clear about what their roles would be within a broader org chart—and be crystal clear about yours too (see point 12). Otherwise, your company risks getting bloated and collapsing under its own weight.
It also pays to have a formalized onboarding process for that matter. That way, new hires can be brought up to speed quickly and (as emphasized in point 8) consistently.
15. Mind your well-being
You don’t need us to remind you that running a business can be exhausting. It does bear repeating, however, that happy leaders are good leaders. And that means protecting your downtime to relax, recharge, and prevent long-lasting burnout.
Believe it or not, there’s a way to invest in that. As Marindo Kuy tells it, “The way I think about my business is changing. I have kids now, right? So when I take out a loan today, it’s actually to buy time for myself. That’s why five months ago I hired somebody who does maybe 70% of my job. Now I get more time with my family. I don't have to work weekends anymore—at least not many of them, haha. It’s been a worthwhile investment for sure.”
Read Kuy’s story here.
16. Beware of overdiversification
Okay, this one may sound like the opposite of “Investing in Product Diversity” (point 5), but there is such a thing as spreading your product line too thin. Not only does it confuse customers about your positioning in the market (“What exactly do they do, again?”) it also arouses suspicion and erodes trust (“They can’t be good at all of that.”)
So while having only one product may be risky (cupcakes, anyone?), taking on too much is riskier still. There’s no magic number here, but it’s likely in the single digits, at least to start.
17. Consider a physical shop
A great way to start small is to start online. Compared to brick-and-mortar, an eCommerce site or Instagram account is a comparatively affordable way to test out products, establish your brand, and build a reliable customer base.
To grow, however, you may want to consider a physical space. The costs are higher, yes, and there is even some risk involved. But real-life storefronts allow businesses to ground themselves in neighbourhoods long-term and deliver better customer experiences to those communities—not to mention walk-by traffic.
18. Ensure quick access to emergency funds
Fridge broke down? Van got stolen? When the unexpected happens—and it will, especially when trying to grow—you want to make sure you can get access to funding as quickly as possible. Not in two weeks. Not in two months. But now, while things are on fire. That way, you can fix the issue before it gets worse and get your business’s growth plan back on track.
In fact, quick access to funds isn’t just about managing unforeseen crises. It’s also about seizing time-sensitive opportunities (see point 9), whether it’s a vendor’s limited time offer or a temporarily discounted lease.
Take it from Thinking Capital customer Aman Boyal, who now owns five convenience and clothing stores across Edmonton (and counting): “I’ve been with Thinking Capital for four years... If I need five thousand dollars, I apply and get it immediately. No bank could give you money in 24 hours.”
Learn how to get quick access to emergency funds from Thinking Capital.
19. Don’t just look at growth—look at cost
Businesses anxious to grow quickly tend to focus on expansion at all costs. What they tend to ignore, however, is that “at all costs” can be very expensive.
Expansion, after all, means more production, which in turn means more labor, more equipment, more packaging, more real estate—in short, more expenses. If you want to grow sustainably, it is essential to watch not just your sales figures but your operating costs, forming a more holistic view of your profits and not going too deep into debt before you see any.
Take it from Wise Acre Frozen Treats, whose all-too-rapid growth ended up costing them more than they could afford. In just two years, the maker of organic, naturally sweetened popsicles went from a schoolhouse kitchen to a 3,000-square-foot manufacturing facility and giant contracts to distribute along the west coast. All promising signs of growth—only it cost them so much they went bankrupt.
As Wise Acre’s CEO Jim Picariello put it, “We went from eight stores to dozens, then hundreds, immediately. We were burning through about $30,000 a month at our peak, but we didn't have the capital in place to back it up.”
The lesson? Growth is a wonderful thing, but sharp upticks can be destabilizing—and without factoring in cost, you’re only seeing one side of the story. So mind your costs, and mind how fast they ratchet up. Because at the end of the day, sales aren’t the same as profits, and we call the latter “the bottom line” for a reason.
Advice and research for Canadian small businesses from our expert team