Many small business owners picture their growth curve like an escalator: a steady, consistent climb. So when a sudden surge in sales—perhaps from a celebrity endorsement or a positive review—makes that curve look more like an ascent of Mount Everest, owners can find themselves in the enviable yet tricky position of demand outpacing their capacity.
While you can’t always predict those spikes in demand, you certainly can prepare for them. By setting up a proactive strategy for suppliers, staff and credit, you’ll be ready and able to take full advantage of those opportunities to grow your sales and customer base.
1. Find backup suppliers
“We coach our clients that they first have to manage their risk and diversify their suppliers,” says Jeff Patterson, area director of Georgia State University’s Small Business Development Center in Atlanta. “That way you’re not wed to one vendor. If you suddenly need additional capacity, you can spread that around between your suppliers so you don’t have a hiccup in your supply.”
Where can you find new suppliers? “Trade shows are invaluable,” says Lois Judy, co-founder of Fondarific in Savannah, Ga. The company sells its 15 flavors of cake fondant internationally and has earned acclaim throughout the cake-decorating industry. At a recent trade show, Judy found two potential new suppliers for one of her main ingredients. “If you have a booth at a show, it’s important to walk the show, too, to see what’s on display,” she says.
Your current supplier likely belongs to a trade association; check that association’s member roster to find potential new suppliers. Your local chapter of the U.S. Small Business Administration (SBA) also can provide networking opportunities and guidance. And be sure to ask customers whom they do business with because they might have connections to share.
2. Evaluate your staffing needs
A spike in demand usually calls for not just all hands on deck, but more hands on deck. Your challenge will be to determine if you need a short-term staffing bump, a larger restructuring of your organization—or both.
“Most of our small business clients rely heavily on temp-staffing companies,” Patterson says. “That achieves two goals. First, the person you hire has already had a background check. Second, it fits that just-in-time production concept: There’s a pool of talent you can draw on when you need it.”
If sudden growth would push your small business into unfamiliar territory, consider hiring a higher-level sales or operations manager with experience on the scale you’re fast approaching. That person could assume some of the day-to-day duties that often consume small business owners.
Judy did a bit of both. When an order came in from a craft store chain with 1,200 stores, Judy hired temps to staff the production line. “We also promoted a couple of current employees to supervisors to train the new workers,” Judy says. That freed up her time to address other strategic issues.
3. Line up credit before you need it
Before a spike in demand puts your growing company in a credit crunch, you’ll want to line up credit options suited to your needs.
Judy secured a business credit card. Its higher limit and longer grace period helped her better manage her cash flow. Similarly, a line of credit from a bank can serve as a flexible, convenient way to meet your short-term funding needs—and help keep you and your business on track for your long-term goals.
Prepare your business for the potential surge in demand you’re working toward, and when it arrives, you’ll be in the ideal position to profit.