If your start-up is going through a period of rapid growth, it seems counterintuitive to view that as something to worry about. When sales are skyrocketing, marketing is bringing in countless new leads and you’re hiring staff left, right and centre, only a real killjoy would see that as a problem!
All the same, if you want to build your business on solid foundations, developing your business growth strategies is a sensible precaution.
Every year Inc Magazine produces its annual listing of the fastest growing companies in the US. However, a follow up study, which looked at those same fast-growing companies five to eight years after they’d originally appeared in the list, discovered that two-thirds had either gone out of business, been sold or shrunk in size. The reason? They had poor or non-existent business growth strategies.
Why do you need to manage growth?
Growth is expensive. Your sales team might be bringing in record revenue, but if you want to fulfil all those orders, you also need to spend more money and use your resources more intensely than ever before:
- Your production team needs to create more of what you produce, meaning you need to hire more people
- Staff are overworked and can make mistakes, while training up new employees takes time
- You need to buy more from your suppliers
- You need to spend more on R&D to keep new ideas coming
- Your staff will have more expenses
- Your tax bill will be greater
- Your logistics will become more complex if you want to keep all your new customers happy
If you’re growing fast, you might end up spending more on these expenses than you’re able to bring in. Eventually, the business becomes chaotic and disorganised, customers are dissatisfied and cashflow problems lead to bigger issues.
3 key business growth strategies
If your business is going through a period of rapid growth, it shows you’re onto a good thing. The following business growth strategies will help you manage your expansion sustainably.
1. Get on top of your finances
One of the major reasons that fast-growing companies run into difficulties is that they simply end up spending more than they earn. When you were starting out, the financial side of running the business would have been straightforward, but as you grow, you’ll have a lot more to think about:
- Debt
- Operational budgets
- Cash budgets
- Financial monitoring systems
- Managing tax
- More complex payroll
Whether you hire an in-house finance team or work with an external accountant, it’s very sensible to set up regular meetings to understand the business’s finances. If it turns out your forecasts aren’t as rosy as you might have thought, you can start working out what the problems are and find ways to resolve them.
2. Backend systems and infrastructure
A lot of start-ups get by with little more than the most basic IT for managing documents, a simple website with a phone number and an email address. However, as you grow, you need to upgrade your systems to manage the amount of work coming your way.
Employees can waste hours every day hunting for documents on dated IT infrastructure, and customers will get frustrated if the only way they can contact you is via an email address that no one has time to properly monitor, or if you only take payments via bank transfer.
Upgrading your backend infrastructure can make you a lot faster and much more responsive to customer needs. There’s a massive range of free or cheap IT systems available online, so it’s very sensible to investigate the tech which will suit your business. Some popular tools include:
- zendesk is a customer support ticketing system
- Basecamp helps you organise projects internally
- Box helps you store countless documents cheaply and securely
- Stripe helps you accept online payments
3. Organisational structure
When you started out, everyone in the business knew everyone else, knew what their roles were and who to talk to to get things done. But, as you grow, things become a lot more complicated. Without structure in place, new employees will be unclear who they’re supposed to report into. At the same time, employees who’ve been at the business longer might continue to behave in the way they did when the company was just a handful of people, not following due process.
Both these issues can cause real problems:
- A lot of time is wasted because there’s no structure or process
- The founder might end up micro-managing teams in the way they did when the firm was much smaller
- There’s a lack of accountability or transparency which can lead to inefficiency, worse quality and disengaged staff
To mitigate these problems, it’s important to start putting structures into place which grow in line with the business. While it might not quite fit with your original start-up ethos, creating an organisation chart, which clearly maps out who reports into who, how often and about what, remains the tried and tested way of building a business on stable foundations.
Manage your growth
At DSL, we help firms like yours grow on solid foundations. If you’re going through a period of expansion, but want to make sure your finances are adding up so that growth is sustainable, our highly experienced accountants can help. Contact our friendly team today about your business growth strategies.