It might sound surprising because, after all, growth is a good thing. But sometimes, growth kills your company. The speed at which you expand, can in many cases, be simply too much too soon. Growth usually brings about many changes, and some of those changes can tip the balance, and before you know it, everything crumbles. 

Growth, for the most part, requires some careful planning. Financial planning is one of the critical components of it. 

Cash flow needs for a growing business can change quickly, so growth planning is essential. 

While business growth and expansion is something we all look forward to, you have to be proactive in tackling it. Controlling the speed might not be possible, but knowing when to hold the reigns is essential. 

Growth Objectives

You have an idea of what your business growth looks like already, it is something that many business owners consider when they are first starting up. 

Think about your growth objectives:

  • Are you hiring too many people too quickly?

  • Are the receivables coming in fast enough?

  • Is the production line efficient?

  • Do you have the capital to facilitate growth?

  • What is your reason for pushing the growth – for notoriety, profit, or seeing your products go global?

Understanding your objective is essential. 

Growth Diagnosis

If you have been at the helm for some time, it can be easy to be blinded to some of the aspects of your business that need to be improved. A general assessment will cover cash flow, assets, receivables, overheads, and more. That is much of the finance covered. 

But could you handle these as the company grows? Are your assets and inventory absorbing a lot of capital? Will you need to refinance? Hiring a part-time CFO can revolutionize many of these factors and give you the answers you need. 

Sustainable

It can be hard to tell if you are going through a great sales period, if you are capitalizing on a seasonal boost – or you are genuinely really growing. The confusion here will mean any significant changes won’t be sustainable if you don’t analyze the data. 

Understanding the cause of your business growth can help you leverage that ever further. It might be that you have a particular product that is consistently sold out or on backorders, in which case look for the pattern, and move forward based on that.  

Forecast

It is time to really study those numbers. Your cash flow now will be a key indicator of your future cash flow. You will be able to make improvements and see the increase in profit over a consecutive period. 

This data will give you a forecast that can be used to apply for finances, restructure your debts, or convert unused assets into cold hard cash. 

Payables and Receivables

Take a look at your payables and receivables. You are most likely able to improve your liquidity problems by doing so.

Here are some points to look at:

  • Are your payment terms clear?

  • Is the collection method you use, working?

  • Do you actively run credit checks on clients?

  • Do your credit terms negatively impact your business? 

Look at your payables under the same light. 

  • Can you get extensions on your commercial credit? 

  • How much interest are you paying on the credit lines you have?

  • Are you eligible for extensions on your commercial credit?

There might be a number of changes you can make here to give you better cash flow. 

Costs

Keeping costs under control takes planning. Setting firm goals in order to cut costs can help free up some cash to facilitate growth. During a growth period, it can be tempting to sign off on large shipments, new hires, and more. But that can be the start of issues if you don’t also control your costs, because you’ll start stacking debt instead. 

Debt

Fast growth can put your business in a risky financial position. Debts can become too large to manage. Even with more customers buying from you, the income might not cover the debt. It is often better to skip taking multiple credit lines out, and instead look for areas to cut back spending, consider leasing instead of purchasing, and negotiate better terms with suppliers

Customers First, Always

During growth periods, it becomes easy to let things slip. You can’t afford to have that be your customer service. Pay close attention to what your customers are saying about the direction your business is going, and if there have been any expectations that you have failed to meet. 

If you have been giving personalized support to customers for years, and suddenly they are listening to elevator music on the phone for 30 minutes – you can be sure they will begin to look elsewhere; and give you a bad review. Remember that it is the customers that pay your bills, and the customers that have helped you to get to this area of growth. 

Team

Rapid growth will mean that your current team will be stretched beyond their means pretty quickly. This is the ideal time to step back and reassess your staffing needs. Do you need more people on the phone? What about someone to handle the admin? PR? Marketing? 

If you don’t want to commit to having new permanent staff, it is possible to hire a range of freelancers to cover some of the tasks. There are a number of jobs that can be handled remotely. From customer services and email responses to social media and marketing campaign creation. Think carefully before committing to full-time staff. 

Mentoring

Friends and family can only give you so much information, and growth looks different for every company. You can find a business mentor that can help you clarify your plans, set goals, and give you the support you need to make this growth happen. Seeking advice, information, and support can be vital in having the confidence to move forward when it is the right time for your business to do so. 

If you choose to look for a mentor, it is essential that you find one that suits your personality. They will be qualified in a range of different areas, and some will work with you better than others. Have a checklist of what you are looking for in terms of a mentor, here are a few questions you can ask:

  • Enthusiasm about what you do AND why you do it.

  • Respectful attitude, but this one goes both ways. Give respect in terms of contact times, language, and expectations – and you’ll get it right back. 

  • Honesty is one of the reasons mentors are so good. They aren’t friends and family and won’t try to save your feelings when guiding you. 

  • Directness is a coveted trait. Being able to tell you something in a constructive way, but direct and with zero malice is ideal. They aren’t shy to hurt your feelings if it is in your best interest. They will call you out when you need it most. 

  • Active listening skills that can be demonstrated within your communication. For example, if you email them a question – do they respond to what you are asking, or respond with a straight solution? It is better that they actively listen, so they will steer where you should be going – without providing the solutions, instead of giving you the tools to find your own solution. 

Team

Your team is going to have a huge impact on how you do business now and in the future. Your ideal team should be supporting and goal-driven. Meaning they take your business vision on as their own and push towards it. Skills at what they do but willing to learn other tasks can be hugely beneficial too. 

Many CEOs and business owners shy away from hiring people that may be smarter than they are. However, that can be exactly what you need to shake things up and keep you moving forward during a growth period. They will bring ideas, innovation, and more to the table. 

Adapt

Trends change, and so do procedures, laws, and people. You have to be able to take what you’re doing and adapt it to the current economic climate, your local area. Having the confidence to test a number of approaches and see what works best. 

During growth, you should be able to adapt quickly to the changing environment. Being an effective leader is much about inspiration, decision making, and approaching those decisions with the right data.

The growth period of a company can be volatile. Finances can change in a few hours, and more moving parts mean more space for things to go wrong. Plan and prepare as much as possible, because sometimes the biggest curveballs will be thrown as you are making rapid and exciting changes to your business. Growth isn’t a linear process. In most cases, it can look different for most businesses. What really matters is that you have all of the data and can make the right decisions at the right time for your business. 

By Erica Buteau

Change Agent. Daydream Believer. Maker. Creative. Likes love, peace and Jeeping. Dislikes winter, paper cuts and war. She/Her/Hers.

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