Many business owners would be thrilled to have their company’s revenue and net income grow by double digits every year, but high growth businesses can face challenges. If these challenges are not carefully planned for, the company and its people can become overwhelmed. Business owners need to develop and execute a plan for growth by setting objectives or milestones and addressing high priority areas.
Three areas that can be particularly challenging:
- Cash Management – Poor cash flow management can cause significant issues for a growing business in need of capital. High growth companies need sources of capital to fund operations and capital needs, and sometimes those sources can be limited. Business owners need to proactively manage their cash flow. Weekly cash forecast reports are key to effectively understanding the organization’s cash position. Businesses should also prepare annual budgets and projections, and update and monitor them regularly. Having a strong working relationship with the company’s lenders is imperative, and owners and management should establish these relationships early on in the business’s life cycle and further develop that relationship over time. Conversations with lenders should be open and honest, and financial information provided to them needs to be accurate and timely.
- Human Resources – Rapidly growing companies often have difficulty finding qualified people. Companies with high levels of growth may find their team members having to cope with higher stress levels as demands on the business increase. Human Resources is a critical area that needs a systematic process in order to make sure time is spent on recruitment and training while minimizing turnover. It is important to have a highly qualified individual to lead this department. Smaller up-and-coming companies that do not have human resources personnel may want to consider adding a leader in order to meet the demand.
- Technology – Having the right systems in place that provide important information to the management team will allow a business to operate more efficiently and effectively. Additionally, having the right resources – both internally and externally – will facilitate the proper management of a company’s technology including hardware needs, regular system updates, cyber security risk mitigation, and disaster recovery plans.
Owners and managers need to continuously plan. Regular meetings and open communication between executives and the management team help a business stay on track and assure managers and employees that there is a plan in place. As high service levels become harder to maintain, companies may need to slow down a bit and sometimes say no in order to stay focused on the company’s objectives and mission. A well-executed growth plan that includes continual monitoring, updating, and improvement will increase a business’s chances to be successful for the long-term.