Is Your Business Ready to Grow? Here's How to Tell.
A growing, thriving business is a wonderful thing. It's often the product of years of hard work, and results in immense satisfaction. However, not all growth is necessarily good. In fact, too much growth too fast can spell a company's doom.
So, how can you avoid the massive implosion that rapid business growth sometimes brings? A well-managed growth strategy is the key. With that in mind, in this article we’ll discuss the signs that indicate whether or not your business is ready to grow quickly, along with how to get your business to a place where it can handle the strains of growth without buckling under the weight of its own newfound success.
Can Your Cash Flow Accommodate It?
Cash flow is important, to put it bluntly. Lack of cash doesn't just make for inability to pay your bills; it puts your company at very real risk of becoming incapable of fulfilling customer orders. And that's a big problem; if you can't ship out products to customers, you can’t stay in business.
This isn't as much of a problem with smaller businesses, but it is one that tends to develop as a company grows. Growth leads to greater expenses, and sometimes those expenses amount to more than the increased revenue can sustain
This is, in fact, one of the biggest ways scaling can actually kill a business. As production, shipping and maintenance costs increase, and as they need to pay more for increased staff to manage it all, business owners often find themselves stuck at breaking even or even netting a loss.
A common mistake business owners make is to use cash from other aspects of the business to pay for expansion. This is the very essence of robbing Peter to pay Paul, and this strategy almost always comes back to haunt business owners. Never take steps to grow your company if it means relying on that month's revenue. With late client payments common across many industries, you could find yourself stuck either diverting funds from somewhere else or delaying shipments.
Can You Handle Changes in the Market?
The market can change on a whim. That's why it's so important to regularly evaluate where you stand as a company and your real and projected profits and expenses. You may also find using social data to be helpful for keying into where the market currently stands. This can include information about news and current events that customers are talking about, the general mood of your target audience, and what kind of activity you are seeing from your fans.
Through thorough evaluation, you'll know where you stand and how to adjust operations during an economic or industry downswing. It'll also point out obvious expenses that can be cut and it will show you how much cash you really have on standby.
Can You Maintain Quality During (and After) Growth?
The idea of company growth can be so exciting that some business owners fail to sufficiently assess the details during the scaling process, which often means things can go unnoticed.
The fact that your company is on the cusp of growth is fantastic, but it’s important to remember that you've only gotten to this place because your customers have come to expect a certain level of quality. One of the most common mistakes made by business owners looking to scale is a sacrifice in quality as quantity increases.
A good way to prevent a quality dip is to assign more of your employees to quality control. With an established set of guidelines in place, there should be no problem assessing the quality of your products and ensuring they live up to your established standards.
Can Your Team Grow Alongside the Company?
An integral component of scaling a business is increasing the number of people who work for you across all levels of the company. If you currently have many management responsibilities, you'll likely need to hire managers who can take on some of that workload. As the company gets bigger, it’s your job to keep an eye on the overall functionality of operations, not the little details.
That's where hiring competent managers and other employees who can follow your lead becomes crucial. To do otherwise is to foster an environment of frustration and confusion, which isn't conducive to growth.
A growing business is a clear indicator of success. But that same success can, and often does, lead to a company’s downfall. Only those businesses that have taken the time to do the research, crunch the numbers, and carefully, strategically scale will reach the next level of success.
When your business does start to grow, make sure to keep your independent agent in the loop to make sure you are insured correctly.
About the author: Jayson DeMers is the founder & CEO of AudienceBloom, a Seattle-based content marketing & social media agency. Jayson graduated from the University of Washington in 2008 with a degree in Business Administration, and immediately entered the field of online marketing. Since then, he has become a contributor to Forbes, HuffingtonPost, Entrepreneur.com, and other major media publications.
Jayson occasionally guest lectures for 400-level marketing classes at the University of Washington, and keynoted the 2013 "MarketingProfs University." He's a member of Entrepreneur.com's "Team Digital," which provides weekly marketing insight for entrepreneurs.
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