Top 5 Challenges for Fast Growth Companies
If you’ve got a good business idea and the energy to push it forward, it’s not uncommon to achieve 100% year-on-year growth in your first few years of business. However, if your company growth is moving at speed, there are some key challenges you’ll need to get to grips with to keep it from crashing into the barriers. The most important of which is:
1. Decision Making At Speed
As you are hit by a rapidly increasing list of questions to answer, it can be tempting to favour making snap decisions from a limited range of choices. On the face of it, it looks like you are moving forward at speed. But quick decision-making may not always get you to your desired result. According to some research in this area by Paul Nutt in his book ‘Why Decisions Fail: Avoiding the Blunders and Traps That Lead to Debacles’ business decisions that are taken off the back of looking at just two options can have more than a 50% failure rate.
Counter-intuitively as soon as you start to consider more than two options, that failure rate drops to 30%. So taking the time to better consider a range of decision options can have very positive effects. It can end up saving you valuable time and increasing your decision-making success rate considerably.
This is where coaching and mentoring from an advisor can provide significant added value as you are helped to review a wider range of options rather than just the obvious ones.
Other areas that become challenging as you grow rapidly are;
2. Workload Rapidly Increasing
Building a business can be a very complex process. As soon as you start to pick up speed, there are multiple tasks to manage on a daily basis and many skills you may literally have to pick up as you go. If you’re serious about expanding your business, you’re going to have to build a team to support you in your endeavours. The key questions to ask yourself at each point of team expansion are:
a) What am I doing that someone else could do with just a small amount of training or expertise?
b) What tasks are business critical and require skills or experience that I’m/the existing team are struggling to master?
- These will be the jobs you’ll need to get support on, perhaps on a part-time or commission basis to start with.
- Alternatively, you may farm out your distribution or other production tasks to a third party company to start with, so you can concentrate on developing other parts of the business that really need your focus.
3. Controlling Your Cash Flow
It doesn’t matter if you’ve been promised the largest contract ever for your amazing service or product. If you don’t have the cash in the bank to pay for the raw materials, extra people hours or new equipment, then that order is worth doodly squat. The best way to make sure you have the money you need to grow is to plan your finances in advance. Create Management Accounts that you can review on a regular basis which project your required spend well in advance. With a longer-term view you can look for supporting finance to help you deliver to your expanding order book.
4. Scaling Your Brand
Many small businesses start with one product in mind and reflect this product in their core brand name. Imagine a drinks company starting out as The Happy Valley Raspberry Gin Company for example. Unfortunately, a little down the line, it becomes apparent that one product does not make a business and the product range has to expand. Now you’ve got a brand name that misleads customers into thinking you’re a one-trick-pony and you’ve got to suddenly look at rebranding or adapting your brand name. Again, the key advice here is to think about where your brand growth might take you early on in your business planning. Don’t limit yourself to a name that holds you tightly in a particular product or service line box.
5. Wages Spend
As you start to grow quickly, another typical impulse can be to throw more people into the business to keep things moving along. This unfortunately is where many businesses start to overspend. If you want to build a sustainable business for the longer term, be sure what each new hire is going to bring to the mix. Have clear job descriptions. Employ for attitude as much as aptitude as hard work needs to be the name of the game when you go through a rapid growth spurt. Team members who show flexibility and the ability to get the job done will go a long way. The ideal recruit will be someone who also has the potential to flex and expand into a higher-level role as your business grows. Get advice on what the typical salary spend should be for your sector so you don’t overstretch yourself here.
Need help with making better decisions for your business? Get in touch today to book a free exploratory call with Susanne Currid and discover how regular advisory sessions can help.
This blog was first published by Susanne Currid on www.lgba.co.uk in April 2017