A new business owner knows they only have so much time to grow the company and become profitable before the initial capital they invested runs out. So it seems counter-intuitive to any entrepreneur to worry about growing too fast. But companies that grow fast can implode so here are some things to look for when jumping to the next level.
1. More Business means more demand on your Cash flow. How are you going to float the credit you extend to your customers?
• Offer Discounts 2-5% for payments in 10 or 15 days.
• Try a 10% COD term if your margin can support that.
You may only need to offer discounts for a short time until your sales level off.
• Enlist your supplier to participate in your growth by extending your terms and increasing your credit with them. Remember your growth is their growth. Look to your suppliers for discounts on volume or fast pay.
• To maintain your cash flow while increasing sales secure additional capital by Factoring, Lines of Credit, Purchase order financing, new partners or additional equity invested in the company. Plan ahead.
2. Quality Controls are more important as your time is stretched. Now you need more systems to help monitor quality, service and inventory. Growth is not sustainable if you can’t keep your customers happy.
3. Watch your Expenses. Often your margins decrease at certain points in the growth cycle as you expand in space, number of employees, additional financing etc. It will take more sales to cover the fancy car expenditure when your margins are down.
4. Make sure your employees are paid on time. Don’t forget how important your key people were in getting you to this point.
5. Leadership style needs to be adjusted and systems in place so you can manage more but not micromanage everything. It’s hard to remember you’re the CEO or the Captain directing the ship not an employee.