When a small business goes through a period of rapid growth, it can be feel like it is out of control and unless handled well can lead to serious problems. It can deter you from taking your business to the next level.
The five cornerstones to manage when growing your business are:
Financing the rapid growth of a business can be very challenging. It is vital to draw a distinction between cash and profit. It is also important to ensure that there is enough cash to cover the costs of rapid growth. The management of the cash flow will help you to work to the limit as it is easy to assume that owed money will come in. However, you need to manage the debtors, as delayed payments can empty your cash position which can be terminal. Finally, do not forget to account for HMRC (e.g. VAT) and put a provision in place so that the bills (e.g. quarterly VAT) is planned for and not seen as a shock.
At times of rapid growth it can be tempting to over recruit or recruit too quickly. Staff are one of the most expensive aspects of your business especially if you recruit the wrong person. It is important to identify the exact requirement in terms of skills, competencies and aptitude and not just recruit a friend or a fried of a friend. Do not manipulate the job to the person because it is easy to do, ensure you recruit the best candidate to match the job.
Moving from a small team of dedicated individuals, who have typically managed through word of mouth, to a larger team quickly will exacerbate inefficiencies, short cuts and short comings in the way things are done. It is important to get organised with simple, written processes and procedures which everyone can understand and refer to.
The owners of the business during time of rapid growth will typically get sucked back into the day-to-day operational side of the business (which naturally get more complex as the company grows). Their micro-management can mean that control is lost and the ‘bigger picture’ is made up ‘on the hoof’. However, be careful not to stand too far back as this can also result in issues as you have no control at all.
Manage your customers and do not take them for granted. At times of rapid growth keeping up with high demand is difficult, especially when catering for the flood of customer demands. It is tempting to cut corners on quality. This will only exacerbate the problems in the long run because of increase in complaints, failure and returns; thereby inherrantly increasing costs.
There are other aspects of the business which will need attention during periods of rapid growth but the priority has to be these five cornerstones (specifically Money – cash flow) which if not managed properly will limit your ability to reach your potential; or worse still can cost you your business.