Today, with technological advances, it takes only one photo, tweet or update about a product and an entrepreneur might find that slow-moving sales of a product suddenly shoot up. This is definitely a dream come true until the company runs out of finished product, is unable to get raw materials at a reasonable price, has to borrow for manufacturing purposes, sees its employees start to quit in frustration and reads about angry customers publicly complaining about bad quality products. Indeed, if you’re not ready for a rapid increase in sales volume, you may suddenly find yourself short on inventory or short on staff.

This usually results into customer service complaints, refund requests, cash flow problems, bad publicity, unsatisfied staff and employee turnover. It is certain that growing too fast is one of the top reasons companies go out of business. Kauffman Foundation research shows that two-thirds of the fastest growing companies end up shrinking, getting sold off or failing entirely within five to eight years, being unable to handle a sales surge. In contrast, a well-managed sales surge can push your company to financial success, provided you avoid some common threats.

 

How does a sales surge happen?

To manage sales surges effectively, it helps to know what kind of events can trigger a spike in sales. Some reasons for sales surges are foreseeable. For example – holidays, seasonal demand cycles and sales. While other reasons are less predictable such as one of your product advertising campaigns might suddenly go viral, driving traffic to your site or store. Additionally, for some products and locations, even a change in weather can spark a sales surge – a winter storm in an area that normally doesn’t get much snow may drive sudden demand for shovels.

It is certain that sales surges caused by predictable factors are easier to plan for than those with unpredictable causes. Yet, being aware of unpredictable factors that cause surges can allow you to prepare contingency plans for the event that these types of surges occur.

 

Here are some effective ways to prepare for a profitable sales surge:

  1. Talk to suppliers in advance

It is important for entrepreneurs to communicate with their suppliers in advance to find out how they might be able to accommodate them if they should need to order a large amount of products quickly. For instance, would the manufacturer have the capacity to take on a much larger order? Consider if there are options like air shipping instead of shipping by boat overseas and find out how much the extra cost is. Such questions can help businesspersons estimate the cost and have a realistic timeframe if orders should suddenly explode.

 

  1. Don’t overpromise

With an attempt to make new customers happy, various companies may feel pressure to promise things that they may or may not be able to deliver.

For instance, the company might guarantee that it will have the item back in stock within the usual six weeks. However, when the owner contacts the manufacturer, it turns out that the larger quantity means that it will take at least more weeks. In addition, it may happens that new or temporary staff hired to accommodate the surge will not be able to work as efficiently as experienced staff.

This is why the company should carefully analyze possible risks and delays and be honest with customers. Obviously, a customer expecting a delivery within ten weeks but receives it in eight weeks is happy, but a customer who expected the order in six weeks may be furious.

 

  1. Keep growth manageable

Companies tend to rush to expand during a sales surge and this can prove to be a big risk. For example, they may stock up on a popular item, but later find that the demand for it has passed or the company may rush to open new locations without doing appropriate market research or ensuring that the staff is fully trained.

Considering expansion during a sales swell could mean the company ends up with bills that it can’t pay once the surge is over, leading to layoffs, debt and potentially bankruptcy. It is wise to grow at a manageable rate, even if it means not being able to serve every potential customer right away.

 

  1. Motivate and provide training to employees

Though the owner sees a sales surge as a growth opportunity, the staff may see it as an overwhelming strain on their time and energy. Wanting to meet demand, the owner may take it for granted that employees will be willing to work overtime every week or spend extra time training new employees.

To retain employees, entrepreneurs should regularly ask them for ideas to reduce the strain and improve the process. Without forgetting to provide compensation for the employees as soon as possible for the extra work, even salaried workers. Besides, ongoing training should take place to prepare employees to tackle any challenges. For example, the company can opt for an innovative eLearning solution for more flexibility and accessibility. This will enable employees to apply what they are learning to their daily tasks.

 

  1. Stay focused on the company vision

Many businesses initially aim to offer a high-quality product or service. However, during a sales surge, the company may start cutting corners. A fast growth may cause a company to forgo many of its core values, which in turn could lead to unsatisfied staff, customers and even the owner. Sometimes, it is better to turn down potential customers politely in order to preserve the integrity of the company until it can handle the growth.

 

Conclusion

There is no doubt that a sales surge could sweep a company to success or force it into bankruptcy; the key is whether the company is prepared to handle it. It is essential for every business to prepare a contingency plan that details how they would handle a sudden spike in sales and still preserve the company’s integrity.