Growing pains are a real thing – we’ve all experienced them and they also exist in business. They are the temporary challenges a business faces when it enters a rapid growth period. While they are a normal part of any expanding business, it’s important to keep an eye on your business’s ‘pain threshold’, to ensure that the temporary challenges don’t become permanent ones.
Increased revenue, maturity, new opportunities are all synonymous with growth, but along with these come new risks and trials, from both internal and external market forces. By planning ahead, you can navigate these challenges with relative ease.
Here are three things that successful, rapidly-expanding businesses need to do well to remain sustainable and manage growth:
Manage your finances
You need to spend money to make money. In a growing business, extra cash is needed to keep up with increased demands placed on daily operations. For example, you might need to rent a bigger office, order more stock, hire additional staff, or buy new equipment. If you don’t keep a close eye on these overheads, they can spiral out of control, and place unnecessary strain on cash flow.
A possible solution is to take out financing – like a working capital loan – to cover immediate expenses. You’ll need to keep a tight handle on your spending though, as it is quite tempting to splurge because there is more money coming into the business, but it’s also the ideal time to cut costs to secure future cashflow.
It’s important to know that banks and other financial institutions consider fast-growing businesses to be risky. Manage your finances well and honour your loan repayments. This will reflect well on your record when you need additional financing.
Taking out a loan is not your only option. You can also consider things like negotiating better payment terms and discounts with suppliers, outsourcing, converting unused assets into cash, leasing assets instead of buying, and restructuring your debt.
The main financial goal is always to maximise business value. Look beyond organic growth and find strategic partners who can help you achieve better operational efficiency and maximise gains at scale.
Manage your people and culture
Having a culture that promotes collaboration, open communication, and engagement will help keep employees motivated, which in turn will have a positive impact on their productivity and creativity. Culture, people, and environment are intricately linked, and are key to overcoming growing pains.
As a company grows, change is bound to occur. It is crucial to effectively manage this change because it will impact your employees, and they ultimately influence the success of your business. Teams need to be guided and supported through change otherwise they could feel overwhelmed and pressured, which could lead to internal friction and poor customer service. Planning for internal growth challenges is key to managing your people.
Give your people opportunities to develop their skills, provide them with adequate training in line with business growth, and ensure your team has the best tools for the job. Setting strategic goals will help guide your management team in identifying high-potential individuals and skills gaps.
Important notes on people: if you need to increase your workforce, hire for culture first and skills second. People can learn how to do a better job, but they cannot be taught how to align with your value set and purpose. Making a bad hire often results in reduced job satisfaction across much of the business.
Outsourcing to a consultant or a freelancer is often cheaper than hiring a full-time resource. This is especially applicable if you are unsure of what your future business needs are, or if you only require certain skills at specific times.
Manage your processes and automate your business
Many small businesses don’t immediately focus on changing their systems and processes as they grow, which often results in inefficiencies and wasted money, time, and resources.
For example, when you have few clients, manually sending invoices and following up on payments is manageable. When your client base grows, however, your accounting administration grows with it. Switching to cloud-based accounting software allows you to send invoices on the fly, automatically send overdue invoice reminders, and gives you a real-time overview of finances. Having up-to-date access to finances means that you can respond to issues as they arise, or even prevent them before they do.
Have processes for every possible aspect of your business and automate them wherever possible. In accounting, processes include using the right collection methods, having clear payment terms, and automating invoicing and quoting.
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Change is the only constant
Businesses operate in constantly changing environments. People, competition, markets, laws, and technology are constantly in flux. When change happens in one, it has potential knock-on effects for everything else. Businesses should aim for agile and aligned teams, sustainable growth that is supported by strong governance, and a clear, flexible strategy that confirms the feasibility of the business model and sets the stage for its growth and development.