The growth stage of any new company is extremely exciting. Your business has caught on and is showing strong growth, your team is expanding, and you're making plans for the future of the company. And while growing is a great sign, there is a danger of growing too quickly.
Not tapping tax and accounting services
When you're in the midst of quick and exponential growth, there's a chance that you may have unknowingly passed the point where you should bring in an expert to help you balance the books. When you were starting your own small business, you probably could keep track of your financial situation with relative ease. Having only a handful of customers, you had a strong idea of where each stood, the cash flow that was coming in.
However, there comes a time when bringing in professional tax accountants becomes a necessity. Not only will professionals help you keep track of your financial dealings, they have insight drawn from working with many other businesses that were on a similar track to yours. With this information, a professional accountant can help point out any potential strengths or weaknesses that you may not have been able to spot without an objective outside opinion.
Losing that personal touch
If you're growing too much, too quickly, make sure you're taking a look in the rearview mirror. From your staff to your customer base, there is a risk that rapid growth means that you are asking more of everyone. Was your company known for its extraordinary customer service – a business that would always go the extra mile and be sure that each client had the product or service that most aligned with their needs instead of trying to make the most money off each transaction? While you're expanding your business, are your core customers – those who were early adopters of your products and have been with you through the long haul – still happy or are they feeling neglected?
If outstanding customer service and relationships were at the heart of your business as it started, a staff that is spread too thin will likely not be able to commit the time required to nurture and maintain those connections.
In addition, as your business and staff grow, you'll have much less time for oversight. You may be used to knowing the ins and outs of your customers and new sales because there were relatively few of them. When you go from a dozen clients to hundreds, it becomes simply impossible to know what's going on in your company at the ground level.
Hopefully, with a strong staff who have been well trained taking over the day-to-day goings on of your business, this might not be an issue. But if there are mistakes and things slipping through the cracks, you might not be aware of customer dissatisfaction until you notice it in your bottom line when they ultimately walk away.
Sacrificing staff moral
Similarly, the culture of startups make them a great place for employees. If what used to be a fun and chatty office is full of burnt-out workers who eat lunch at their desks and regularly sacrifice their personal lives to stay late, you're risking losing not just the culture of your company, but the employees who have been with you since the beginning.
Staff turnover as a result of feeling overworked and underappreciated can have major repercussions in both the short and long term. When an employee leaves, they bring with them months or years of knowledge of your business and its clientele. Not only does hiring replacement staff take a huge amount of time and money, but they won't be able to replace the insight of a tenured staff member for a long time.
Forgetting the big picture
If you see your business scaling at an accelerated rate, it's easy to just focus on growth. After all, that's the goal of your business, right? While that's true, concentrating on short-term expansion can mean you lose sight of the larger picture.
While your focus on growth is understandable, there is a risk of losing track of future growth. Perhaps the quick cash flow that comes with gaining many new customers quickly is enticing, but is it sustainable for the long term? The last thing you want is to see months of growth suddenly stop because you don't have a plan or the staff in place to maintain the professional relationships you're establishing now.
Not scaling up accounts receivable
Cash flow is a challenge for any company. However, for a young company that's scaling quickly, even a small hiccup can have lasting consequences. If your business is financially healthy but you're seeing an issue in cash flow, it's time to take stock of the rate of your growth.
As your business continues to grow, you'll need more cash to keep up with the demands of your new customers. However, you're still collecting accounts receivable from last month or last quarter. Now, you may have planned for just this situation by building up a cash store, but if you didn't, there's no small risk to a lack of cash flow.
It's not all doom and gloom though, and if you've found yourself in this situation there are plenty of solutions. Even if you didn't save cash in a growth reserve fund, you have options to keep your cash flow moving. For a fee, you can use an invoice factoring company that will forward you a percentage of your outstanding balances while pursuing the collections on your behalf. In addition to providing liquidity, it also frees up staff time from chasing down unpaid bills.
A company that is growing quickly is a positive thing. However, it's essential that you lay the groundwork in the early days of your company so you're ready to take on the challenge that all of the additional business will bring your way. Make sure you have your financial situations in order by utilising professional accounting services early in the life of your business.
Contact the specialists WMC Accounting today for more information on how to scale effectively.