Growth is always an exciting stage in any business. It often means more employees, new customers, additional assets, and more revenue and profit for your business. Your entity is essentially on its way to becoming a successful and self-sufficient business. Therefore, growth is something that should leave you feeling proud and happy.
With growth, however, comes a new set of challenges. Your business ceases to become as easy to run as it was when you had one branch, a small team, and a handful of customers. Now, you may have more employees to manage, more customers to satisfy, more assets to maintain, and more things to worry about. How do you keep growth at a sustainable and manageable level?
Simple Tips for Managing Growth in a Small Business
If your business is experiencing a spike in growth, you will want to see these simple tips to ensure you effectively handle the expansion or growth.
Understand the Cause of Growth
The first thing you need to do to manage growth in your small business is to identify your growth indicators. What are the things bringing about growth in your business? Are you serving more customers than you used to? Are you manufacturing more product quantities, or are you processing more orders and transactions? Recognizing and understanding the cause of growth will enable you to create strategies to deal with that particular growth indicator.
A business can grow in many ways. For instance, it can open new branches or expand into new markets. It can hire new employees or add new products and services to its catalog. It can also grow by purchasing and leasing more assets or getting an influx of customers. Strive to understand your cause of growth to manage it better.
Ensure Your Growth Is Sustainable
Another thing you may want to establish is if the growth is occurring due to a temporary change in the market. For example, many e-commerce and online businesses saw an influx in customers during the COVID-19 pandemic. Another example is hotels that experience higher demand during the holiday season.
The growth that occurs due to an unpredictable and temporary change in the market is often unsustainable. It’s also challenging to manage since you most likely didn’t anticipate it, and you don’t know how long it will last. Such growth may call for a different strategy. That’s why you need to be sure if this is the type of growth happening in your entity.
Ensure the Growth Is Profitable
Not all sales growth is profitable. For example, you may have an existing client that wants more products. However, the product is not profitable for your business. It’s one you sell at cost or at a small loss for marketing purposes. An influx of these orders can put you behind because you can’t sell large quantities at a loss. An increase in business also increases costs; therefore, look at the whole picture to ensure the growth is profitable.
Find the Right Balance
When your business shows signs of growth, you wouldn’t want to pass up on the opportunity just because you don’t have the money or capacity. At the same time, it wouldn’t be a good idea to spend all your money and resources to fund the growth opportunity or take up a loan that leaves you in debt for years. Aim to find the right balance.
A good tip would be to invest in the growth opportunity in a way that allows you to keep operations alive. For example, don’t allocate all your cash to fund an expansion. Doing so may lead to poor cash flow. It may also lower your net profits or even result in net losses. At the same time, you shouldn’t assign all your staff members to deal with the influx in growth and leave other departments lacking.
Be Willing to Adapt to Change
Expansion and growth may often require you to make some changes. For example, you may have to adjust your business model, implement new technology, or try a different business strategy. You and your team should be open to adapting to changes that come with growth. Be willing to switch lanes in response to a change in your entity.
Being adaptable is one trait successful businesses have in common. By being open to change, you can try different strategies until you find the best one.
Prepare a Growth Strategy
Once you understand your cause of growth, your next step will be to prepare a strategy. Your growth strategy will essentially be your plan for tackling and managing the opportunity. It will be the roadmap for what you need to do and ways to get to where you want to go.
As you prepare your strategy, first understand the risks of implementing it. Also, make your plan flexible for any changes. There might be things you hadn’t anticipated in your strategy, and thus you might have to make a few modifications as you go.
Make Customer Experience a Priority
Despite the growth occurring in your business, your customers should remain a priority. Always listen to them and strive to meet their needs and expectations. Your customers shouldn’t feel like you don’t need them anymore now that your business is booming and you have more consumers of your product or service.
If you’ve ever tried contacting a big company and ended up on hold or having to talk to an automated robot, you know how frustrating it can be. Don’t subject your customer to such an experience. Aim to treat them with the same value and honor as before. Remember that they are the reason your business is growing.
Get Your Employees on Board and Ensure Your Staffing Is Sufficient
Business growth often comes with a need to hire more employees. Now would be an excellent time to take a step back and assess your staffing needs. Which roles need more people? Which departments are struggling to keep pace with the influx in workload? Aim to ensure you have enough people to manage the growth opportunity at your disposal.
As you evaluate your staffing, talk to your employees to see how they are managing so far. Get them on board with your growth strategy and your hiring plans. You don’t necessarily have to hire permanent employees. Depending on the cause and type of growth, you can also work with contractors and freelancers.
Analyze Your Financial Status
Besides staffing needs, growth also, in most cases, requires additional funds to keep up with the rising day-to-day operations. You may need to invest in an opportunity, purchase more inventory, or lease a bigger space. You might deplete all your cash if you don’t analyze your financial status.
Take this time to examine your expenses, revenue stream, profitability, and cash flow. The key questions to ask yourself as you evaluate your financial status are:
- Does this new opportunity require capital? If so, how much?
- Do I have the money to fund this growth opportunity?
- How healthy is my cash flow? How are my accounts receivables and payables? Do customers pay me fast enough?
- Are my sales and profits sufficient to invest in this new opportunity, or do I need to seek external funding?
- If my sales are not high enough, is there any asset I can quickly turn into cash?
- Will investing in this new opportunity affect my ability to pay expenses and keep daily operations alive?
Forecast Your Cash Requirements
Once you evaluate your financial situation, proceed to forecast your capital needs. Doing so will give you a rough idea of how much cash you require. It will also help you create a spending budget and strategize where to get the funds.
Forecast all the costs that may arise with this growth opportunity, for example, operating expenses, payroll, leasing infrastructure, and purchasing inventory. Once you estimate them, assess whether you have the budget or if you need to seek external funding.
Get the Refinancing You Need
If you are currently servicing an existing business loan, investing in an expansion or growth may hurt your ability to meet your monthly debt payments. In this case, you can consider refinancing your loan. Refinancing means taking a new loan and using it to pay off your current one.
Refinancing helps lower your monthly loan payments by spreading them over a long period. You get to negotiate better terms with the new lender. Loan refinancing may also help ensure your cash flow stays healthy after investing in the growth opportunity.
Manage your debt well to get on the lender’s good side. Start by keeping pace with your monthly loan payments. Don’t let them get out of hand. Once you start missing payments or paying later than required, your lender may begin to doubt your ability to pay them back.
Remember that financial institutions already consider investing in a high-growth entity as risky enough. You need to show them that you are good at managing debt so that they will grant you the funds needed to finance the growth opportunity.
Use Your Team of Advisors
We’ve provided you with many tips, but one of the most important is seeking advice before making any significant change. Call your mentors or board of advisors and tell them about your growth situation. Let them in on your plans and strategies and ask them what they think about it. You don’t have to go through the expansion alone. Getting advice from them will enable you to make sound decisions.
If you don’t have a board of advisors but would like to have one, see our article on building a team of professional advisors.
Growth for your business can happen in many ways, and it often comes with a new set of demands and challenges. While it wouldn’t be advisable to forgo the opportunity without considering it, you shouldn’t also rush into it without planning and analyzing your financial situation. Strive to find the right balance between financing the growth and keeping your day-to-day operations alive.
Regardless of the growth occurring in your entity, always put your customers first. They are the reason your business is growing in the first place. Also, check in with your staff to see how they are doing. Assess if you need to hire more people and in which roles. Lastly, don’t forget to seek advice from your mentors or advisors. You might be surprised to learn they’ve been in similar situations before.
Resources for Managing Growth in a Small Business
In this section of the post, you’ll find a few resources to help you further your understanding of managing growth in your small business. The links lead to the most recent and updated information every time you use them.
Understanding Your Growth Market
Growing markets are ones where the population is increasing or where new customers are entering the market. So if your business is experiencing a spike in growth, it’s a good idea to understand growth markets. The topic of growth markets goes beyond the scope of this article, but it’s something worth looking into. See the latest Google Search Results related to Growth Markets.
Business Growth Strategy Examples
You can study various examples to gain a better understanding of growth strategies. You can also pick up tips and ideas to use in your plan to help you reach your goals. The following link ensures you have the most popular and latest information. See the latest example for Business Growth Strategy.
Books are an excellent source of information for virtually any topic. Naturally, a book goes into a lot more detail than an article, and with nonfiction books, you can always browse the table of contents to go directly to the chapter that interests you.
Below you’ll find two links, one leading to a Google search result and the other for books listed on Amazon. Why not take a few minutes to see what publications are out there and that appeal to you.
There are many courses out there that can help you improve your knowledge and build your management skills to use in your business. You may want to look for a course where an instructor is present, or you may prefer to learn at your own pace and choose a self-study style. In either case, it’s a good idea to see what courses are available and if any of them appeal to you.
The news is another excellent source of information. The key is to find news related to your topic. Using a site like Google News allows you to see what the media covers about managing growth in a small business. For the media to cover a story, it has to be newsworthy, and that’s why I like to browse Google news for topics I’m interested in. You can learn a lot from other people’s experiences, and the news is one way of doing that.
YouTube is an excellent source of information for self-learners. Many of the videos are high-quality, and many content creators put time and effort into building quality channels for their subscribers.
It’s also worth mentioning that when you’re watching a video on YouTube, you’ll get a list of related topics. I always watch out for these because many of them are topics that may not have been considered. So keep an eye out for them. You may find they help you to expand your knowledge.