Managing Business Growth

Martin Mockler, Partner at Evans Mockler Accountants, Auditors, Business and Tax Advisors, considers the steps you should take to manage business growth effectively

There is a real risk that periods of growth will overwhelm a company and result in a situation whereby the business is managing the directors as opposed to the other way around. Experiencing a period of rapid business growth can be a very exciting time as turnover is increasing and the company is making a name for itself in the industry. However, properly managing the risks associated with business growth and realising the full benefits are not simple tasks.

A key tool in our service offering at Evans Mockler is to chair regular board meetings in order to review the performance of the business. We consider the short to medium term operational results of the business together with the long-term strategy for the company.

The board meetings are held at varying intervals and focus on Key Performance Indicators (KPIs) we have identified and agreed with the directors. We also review management accounts and information for the preceding period, together with forecasts and cash flows for the future.

An important element of the review is comparing how the business performed against the budget for the period and investigating any related variances. We also carry out an analysis of strengths, weaknesses, opportunities and threats (SWOT test) related to the company and address each of these areas separately.

Our experience has enabled us to identify 5 areas to target to help you keep pace with your fast-growing company:

1. Prepare a financial budget for the future

It is easy to become complacent when your businesses profits are rising, but if you don’t adopt a new budget plan and reallocate money where needed, the risk of cashflow problems will increase. The faster a business grows, the more important it is to plan future financial decisions.

We can’t stress enough how vital it is to set KPIs, forecast your upcoming cashflow commitments, profits and turnover, and stay organised. You need to develop good habits now and stay consistent with them as your business continues to grow.

2. Engage the right team

The employees and subcontractors that you engage are invariably the people that influence the future success of your business. Skill set and culture fit are the most important aspects of hiring and retaining great people. Your team should reflect the ultimate vision of your company and represent the values, beliefs, behaviours and experiences that make up your business work environment.

The growth of your business will demand that you hire additional senior members of your team. One of the common issues we see is the business owners having to spread themselves too thinly as the business grows. It is vital you have an excellent senior management team underneath you as you cannot do everything.

3. Focus on your strengths

As your business grows, you need to leverage areas of uniqueness and strength. It is essential to capitalise on the factors that make you stand out from your competitors and identify and focus on your target clients and their needs.

Focusing on what you know you are good at heightens your sense of selfsatisfaction, which, in turn, increases performance and productivity, boosting the overall company morale.

There is a danger that as the company grows and diversifies into new areas the core business can be neglected, leading to unhappy clients and reputational damage, so be aware of this risk.

4. Fund your working capital

Businesses need to maintain adequate levels of working capital to continue to grow. Growth can put high demands on cashflow due to funding the first few months of larger contracts. A working capital loan or invoice discounting facility can supply you with supplementary funding needed to accommodate new contracts, fund work in progress, update your plant and equipment, expand your office space and engage additional team members. Make sure you get the right loan option for you.

5. Keep reviewing and improving your business

Regularly reviewing your standard operating procedures and your wider business model is important. The procedures that may have been successful when your business was smaller may not be as effective now. Having documented procedures for every aspect of your business is essential. This will allow your company to run smoothly and cope with additional turnover. It is also important to identify new goals and put deadlines in place to stay on track for further growth, including financing requirements when required.

Maintaining your high level of quality and service together with overall client satisfaction becomes harder to do as your company grows quickly. However following these steps should enable you to manage the process with fewer growing pains.

Please feel free to contact us if you would like a chat about our business advisory services particularly if your turnover is currently increasing www.evansmockler.co.uk