Any growth, let alone rapid growth has been a challenge for the last few years, given the downturn of the economy. Thankfully, many companies are seeing light at the end of the tunnel. However, rapid growth has been a reality for some, and one of the components of success is obviously meeting financial requirements. This means careful attention to cash flow forecasting.
There are inherent risks to rapid growth. The disruption can be felt in every aspect of the business, from sales and marketing to strains on IT, and constant changes in employment structure. Problems barely noticed during a growth explosion can easily escalate as growth slows to a steadier rate. Any sudden growth needs to be accompanied by a comprehensive strategy. Consider carefully the best plan of action. It is not necessary to expand simply because revenues are increasing, a larger company means a different strategic direction.
So what should be considered when it comes to growth management?
Cash flow management – growth is exciting, and watching orders come in make it all too simple to adopt only the basic money management system, and spend possibly more than the company will be able to sustain. However, really understanding where the company is headed and prioritizing things like payments to key suppliers will be helpful. With growth comes the decision whether to expand or not, as we discussed earlier, and with expansion comes the necessity to recruit more staff.
Recruiting the correct talent – establishing a company environment that works. Successful small startups are most often a tight nit group of like-minded individuals intent upon becoming successful. Be sure to set up a company culture that addresses the importance of working as a team. Bad feelings among the ranks can seriously damage the future success of the company. Setting up for success from the very beginning will make growing your staff, and keeping them motivated, so much simpler. It may cost more to find the correct staff for the roles, but it is better to set aside a healthy budget to hire the best.
The big picture – Rapid growth often means fighting just to stay on top of everything. This can sometimes mean losing sight of the big picture just to deal with day-to-day issues. The correct leadership skills are vital from the start, to establish a healthy balance between your involvement in the daily processes and your role as a leader.
If your company is rapidly growing, but you are waiting 30 days or more for payment on your invoices, it is worth considering accounts receivable financing to keep your cash flowing.