In the fourth blog of our business growth series, Tait Walker discusses how to manage rapid growth.
Managing a fast growing business can be more challenging than turning around a struggling one. If the management team isn’t aware of the pitfalls, rapid expansion can create financial and operational instability. Here are some ways of coping:
Stay in financial control
The management team must have a firm grip on financial performance through monthly management accounts that include cash flow, profit and loss and balance sheet data.
In addition, you should set budgets that include KPIs (key performance indicators) to monitor trends and provide performance feedback to management.
Find the right funding
Invoice finance is a popular form of funding for fast growth businesses. Using the sales ledger as security, management can access finance immediately – typically at 85 per cent of the invoice value.
This effectively bridges payment gaps common among rapidly expanding businesses that would otherwise not have the cashflow to finance major new orders. However, because invoice funding is geared directly to sales, businesses can encounter problems if performance falls away.
You’ll have to work closely with your professional advisors to look at a range of funding options to find the most suitable solution.
Develop your senior team
The sales or product driven management team you started out with isn’t necessarily equipped to manage the business through a turbulent period of fast growth. Gifted technicians may not have leadership qualities, while stellar sales managers may lack the analytical skills.
So be prepared to bring in seasoned executives – including non-executives – to deliver the board-level expertise you need to steer a steady course.
Your skills base may be fine, but as you grow, so does the need to recruit people who are in tune with your culture and values. Take the time to ensure candidates will complement their prospective teams and you will be rewarded by higher productivity and a more committed workforce. Incentivising and rewarding your staff will engender loyalty, ensure your products and services are top-notch and drive growth.
Don’t lose sight of the customer’s needs
Think of your business from the customer’s perspective with a clear set of principles to live by. This, not profit, should be your primary filter for what you do and don’t do. That’s why it’s important to understand why you’re growing. Constantly refine your offer in response to customers’ needs. You cannot do this if you don’t know your customer. If you do this your growth will be based on maintaining relevance.