This Female Founder's Business Thrived Against the Odds. Learn How. You've launched your great idea. Things are going well. How do you make sure your growth continues?

By all accounts, there's no way that Rachel Hunter's floral business A Florae should have survived—much less thrived—in 2020. But thrive it did: Hunter managed to keep her floral design studio and shop open, even when 80% of her events cancelled. She even expanded her retail store to include clothing, and added employees, too.

In doing so, Hunter dodged the cascade of hundreds of thousands of permanent small business closures in 2020 and 2021¹. More importantly, she strategically strengthened and broadened A Florae's original purpose.

"You learn so much about yourself when you're knocked down," Hunter says.

Small businesses are often born of enthusiasm, but growth carries risk and can lead to failure, too. These insights can help you stay on a course for stability and expansion—for years and decades to come.

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More and more people are turning to entrepreneurship to fulfill their career goals: 5 million new businesses were launched in the first 11 months of 2021, according to the U.S. Census Bureau. That's an increase of 55% from 2019, and about one-third of those business owners are new to the world of entrepreneurship.

But does a mechanic launch a repair shop because they love human resources or website design? Probably not. "A lot of people didn't start out as small business owners—they started doing something they love," says Nate Schelhaas, senior vice president and head of life protection solutions at Principal®. "Typically, they're not primarily businesspeople. The running of the business is secondary."

In hindsight, Hunter wishes she would have brought on an administrative assistant from the get-go. "I hired the people it took to run the retail and events side, but I didn't make smart decisions when it came to supporting myself as CEO," she says.

A team of reliable professionals can help at every stage of your business plan. Those include a financial professional (financial and succession planning), tax professional (paperwork and tax payments throughout the year), lawyer (contracts and succession planning), and human resources representative (hiring, benefits package creation, and administration).

Use your business purpose as a guide.

Hunter initially added a small retail component to her operation because events on her calendar ebb and flow during the year. Expanding that during the 2020 shutdowns—when people needed cozy sweatshirts more than special-occasion bouquets—served as a proactive way to recoup lost revenue.

The strategy worked, mostly because the goods she was selling—clothing, home, a little bit of thrift—were a natural outgrowth of her original business model. Shifting that expansion to a permanent part of her business plan made equal sense.

"When you think about expansion, always come back to your original business purpose," Schelhaas says. "Are you overextending yourself and losing sight of that, or cushioning the lane you've chosen? Ask yourself, 'What markets should I be tapping into that I'm not?'"

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Actively manage financials.

Preparation remains an essential tool, stresses Schelhaas, even if the economic outlook is steady. "Think back to the 2008 recession: It happened so quickly that if a business wasn't prepared financially for a downturn, they may not have had the time to set up what they needed," he says.

Always-on tools include an established business line of credit and monthly financial reviews of cash flow, profit margins, and accounts receivable and payable. "Have all that in place now so you have it whether or not there's a recession on the horizon. What would it take for you to keep your doors open at your busiest time and at your slowest time?" Schelhaas says.

Continuously recruit and retain.

If you're not in active hiring mode, you can identify and nurture key employees, Schelhaas says: "Those folks often have a unique skill set that's essential for you—perhaps one you don't have but rely on."

Those retention efforts may also include ongoing training and regular, honest communications with every employee—when times are good and you may need some to work overtime, for example, or when there's a downturn so no one feels blindsided. "Sharing information is important," Schelhaas says. "You can get an understanding of what employees like about work and what's valuable to them."

When you are in growth mode, resist the urge to hire just anyone, Schelhaas says. "Focus on the skill set you need." he says.

That includes distinguishing between over- or under-hiring. "You don't want to hire two people when you need five, or hire five when you need two," he says.

Plan for ups and downs in growth.

Growth is exciting; the reverse can be scary. As a small business owner or manager, you'll have to dig deep to learn more not just about what you're doing, but also about the signs of an economic shift on the horizon and what steps you can take to adjust, says Schelhaas.

"It's a balance—you don't want to grow so fast you can't keep up," he says. "You also don't want to overextend yourself that you can't survive if things slow down."

Watch for signals from customers who are pulling back or ramping up. Talking to other business owners—inside and outside your industry—helps, too.

For example, In the midst of uncertain times in November 2020, Hunter signed a two-year lease on a bigger space, and filled it with items customer surveys told her would be popular.

"A huge piece of running a business comes by building your competence and trusting others," Hunter says.

You're busy running your business today. Get help planning for tomorrow at principal.com/benefits.