5 Ways to Manage Rapid Business Growth
Essentially, it’s about analyzing how you run your business and how you could better control the aspects of your business that affect cash flow. Typically, a comprehensive growth diagnostic includes analyzing sales, overhead, accounts receivable, inventory, and assets. It is crucial to determine if you are spending too much money on your inventory and fixed assets and, if so, to take steps to keep them under control.
Streamline and Simplify Processes
As a business grows, you may find that your workload and the workload of your employees start increasing to an unsustainable level. Before speeding out to hire more people, it’s a great idea to take a step back and see what you can improve operationally by streamlining and automation processes.
Start by reducing tasks that you don’t need to do. As your business grows, you’ll find that there might be tasks that are either no longer required or were inefficient, to begin with. Eliminate what you can without sacrificing quality.
Once you’ve to go through anything unnecessary, see if you can merge employee tasks or reorganize functions to make them more efficient. Once you go through this process, it will be easier to know who you need to hire and their exact responsibilities.
One capacity that is anything but challenging to smooth out is your bookkeeping. Manual bookkeeping and report creation can work for a brief timeframe when your business is small. However, it’s not ideal. As your business develops, outsourcing strong accounting and bookkeeping services can assist you with settling on smart choices about your business rapidly. BetterWorks offers bookkeeping software to help grow your business, making it a brilliant choice for organizations experiencing growth.
Analyze your accounts receivable and your accounts payable
Examine your financial records receivable and payable to determine how to alleviate your liquidity problems.
Here are the most efficient ways to manage your accounts receivable:
- Check the creditworthiness of your customers.
- Establish clear payment terms.
- Use the correct collection methods.
- Fix problems quickly.
Monitor the collection delay and take appropriate action (for example, blocking significantly overdue accounts).
If your credit policy is affecting your cash flow, see if you can shorten your collection time.
A sale is not a sale until the payment is deposited in the bank account! Apply the same thought to analyze your accounts payable. Ask yourself the following questions: How much trade credit do you get from your vendors or suppliers? What is the amount of interest?
Can you get a payment deadline from your vendors?
Are you using the “ just-in-time ” method of reducing inventory through close coordination of replenishment and delivery?
Control costs with effective planning. You can consider using a rigorous system to streamline overhead costs like rent, equipment, human resources, office supplies, and more. Ensure you set tangible cost reduction goals, designate a manager, and get buy-in from employees to help keep costs down. Keep an eye on controlling costs during periods of accelerated growth that often result in sprawling spending.
Control your debt
Control your debt so that lenders continue to see you as a viable customer and provide you with the financing you need to meet your needs. Keep in mind that high-growth companies and businesses can represent risks for financial institutions. You can also look for options for standard debt financing. For example, Why not negotiate more advantageous payment terms with your vendors or suppliers or opt for leasing rather than purchasing goods?
All businesses generate and rely on large volumes of information: financial records, customer interactions and other business relationships, employee information, regulatory requirements, and so on. It is too much to monitor, let alone use them effectively, without the proper systems.
As your business grows, responsibilities and tasks can be delegated, but you cannot manage effectively without robust information management systems. The more your business grows, the more difficult it is to ensure that information is shared and that different services work together effectively. Having the proper infrastructure in place is an essential part of helping your business grow.
Documentation, policies, and procedures are also becoming increasingly important. The informality that can work with one or two employees and a handful of clients is impossible in a growing business. It would help if you had the proper records, clear indications, efficient hiring procedures, and so on.
Get the refinancing you need:
After you have analyzed your business, you will be better able to study your payment terms. Refinancing can reduce your monthly payments by allowing you to reschedule your debt and spread your payments over a more extended period.
A request for refinancing is very similar to a request for financing. In both cases, the lender establishes specific repayment terms that you must be able to meet. If you cannot demonstrate your repayment capacity, the lender cannot assume the risk alone.
An up-to-date plan helps you identify the action you need to make any changes on your business and the way it operates, Such as:
Change to suppliers who can grow with you and meet your requirements. As your business grows, quality, consistency, and reliability can be more crucial than just getting the cheapest deal.
Renegotiate contracts to take into account the increase in volume.
Train and develop employees. Your performance and role will also result as the business grows.
Make sure you stay up to date with modern technologies.
However, it is important to understand that creating a growth strategy is not just about your choices. These choices must be motivated by:
The market situation: what are the possible options? Perhaps the market in which you are present will not allow you to implement a concentration strategy. You will therefore have to look for another option.
The situation of your company: this will also limit your field of action. Maybe you don’t have the resources to embark on organic growth? Or you are not “sexy” enough for a merger.
Therefore before creating your growth strategy, it is necessary (as with any strategy) to carry out a detailed analysis of the market (s) in which you are present, the targeted industries, and the different geographical regions. Then, as a second step, it will be necessary to define what capacities and resources are available for this growth strategy.
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