Achieving business growth can be found at the top of the list of most businesses, however business growth can also backfire and get your business into trouble if the necessary preparation is lacking in your organization. Although it can hard to anticipate growth, it is crucial that quick steps are taken to address and accommodate the growth strategies within your business. The most common responses to business growth will require you to increase your real estate space, hire additional employees, purchase additional equipment, or raise additional funding.
The best practice to handle business growth should be clearly outlined in your strategic plan, and should be continuously updated as your business evolves. You may already know of a company that has experienced issues because they grew too fast, and lacked the proper planning to cope.
Here are possible examples of what can occur and possible solutions:
- Business growth required you to purchase costly equipment, however due to poor cash flow, and lack of cash reserves you were not able to acquire new equipment, and further failed to service the additional work. What do you do? Not being able to service a new contract can have penalties involved, not to mention that it will also diminish your reputation. Having cash flow issues may be inherent in your industry, however having a good relationship with a banking institution or investor will help keep your business in tact. A line of credit with a sufficient amount is always recommended to get you out of a jam.
- Business growth required additional employees, however you did not plan ahead of time, and therefore created a strain in your current workforce. As a result you will incur additional cost in overtime pay, lowering your profit margin, as well as run the risk of mistakes that can be made due to overworking current workforce, and in the process running the risk of jeopardizing the quality of your service. Having a labor planning process in place will help you determine the amount of employees required, as well as what additional staffing will need to be added to handle additional business growth.
Regardless of the industry, every business can be faced with the two examples given above. Plan till it hurts, because being in business will give rise to multiple challenges that you have to maneuver through in order to come out a winner. Business growth does not always mean more profit to the bottom line in that the opposite is just as likely to occur. It may require you to increase your administrative staff, compliance, training, and facilities, which all translated into additional cost. However, planning and taking calculated steps should keep your business in good shape, as well as help you determine what is considered health growth for your particular business.