Want exponential growth? We all do—minus the predictable pitfalls. Don’t let yourself get tripped up along the way!
Starting a business can be an ordeal. Keeping your numbers up requires a great amount of effort, but growing too quickly could kill your business. As a business owner, you’d love to see it flourish; but have you ever thought that growing too fast could actually bring you down? Here are a few simple ways to cope with unexpected growth.
Be vigilant about your cash.
Okay, I don’t mean you should literally watch your cash 24/7. Just calculate your numbers correctly, and understand how much cash you’ll require to fulfill a higher demand. Expect that some customers might not pay immediately, or even on time. You might want to obtain financing to cover your cash needs—and remember, always include a safety margin of at least 10-15% to avoid surprises.
Remember, with increased sales, your costs can increase, as well. Market dynamics can hit you with a surprise if you don’t keep your eyes wide open.
The magic word is “forecast.”
Forecasting can be tricky, especially if you don’t have enough information. Remember, with increased sales, your costs can increase, as well. Market dynamics can hit you with a surprise if you don’t keep your eyes wide open. Reforecast your profits and costs. Try to maintain at least three months of cash reserves. Offer incentives to customers who pay immediately (i.e., discounts) and be sure to eliminate unnecessary expenditures.
Organizations change.
As your business grows, your responsibilities grow. It’s time for you to think of hiring people and delegating responsibilities. Be aware of exactly what you delegate, as you don’t want to make things worse. Try to create a structure for maintaining quality and accountability. Define the roles and responsibilities of the team, and be ready to get into human resources best practices.
Quality Control
As you produce a greater number of products, your chances of losing control over quality could increase, resulting in defects. Perform quality checks, and apply procedures for maintaining or enhancing consistent quality. Look into ways to optimize your operations and heighten efficiency. Strive to maintain and optimize staff performance.
It’s time for you to think of hiring people and delegating responsibilities. Be aware of exactly what you delegate, as you don’t want to make things worse.
Always ask yourself: Is this growth good? Is it sustainable, or just temporary? Will the additional revenue cover my costs and maintain existing profit margins? Some of these questions may prove difficult to answer. In any case, don’t let growth be the reason for shutting down your business.
