Growing pains are an actual thing – ask any toddler or teenager. In business, ‘growing pain’ describes the temporary challenges companies face when they enter a phase of rapid growth.
They’re a normal part of doing business, but without a plan to increase your business’s ‘pain threshold’, these temporary challenges can quickly become permanent problems.
Growth suggests maturity, increased revenue and profit, and new opportunities. But with growth comes new risks and growth challenges, both from within the company and from external market forces. Planning for these challenges will help you navigate them.
There are three things successful, fast-growing businesses do well to ensure sustainable, manageable growth.
Let’s unpack each of these.
1.Fast-growing businesses manage their finances
It’s true. You must spend money to make money. A growing business needs extra cash to keep up with the new demands being placed on day-to-day operations. For example, you may need to order more stock, rent a bigger office, hire staff or buy equipment. If not monitored, these overheads can quickly spiral out of control, putting cash flow under pressure.
One solution is to take out financing – like a working capital loan – to cover immediate expenses. A word of warning, though: keep a tight handle on your spending. It might be tempting to splurge now that there’s more money coming into the business, but it’s also a good time to cut costs to secure your future cash flow.
Remember: financial institutions view fast-growing businesses as risky. Manage your finances well and ensure you can honour your loan repayments. This will stand you in good stead when you need additional financing.
There are other options, like negotiating better payment terms and discounts with suppliers, leasing assets instead of buying, outsourcing, converting unused assets into cash, and restructuring your debt.
Your main financial goal should be to maximise your business value. Look beyond organic growth and find strategic partners who can help you achieve better operational efficiency and maximise gains in scale.
2.Fast-growing businesses manage their people and culture
People, culture and environment are closely connected, and are key to overcoming growing pains. Build a culture that promotes engagement, collaboration and open communication. This motivates employees and impacts their productivity and creativity.
With growth comes change. Effectively managing this change internally is crucial because your employees ultimately influence the success of your business. If teams are not supported and guided through the change, they’ll feel pressured and overwhelmed, which can cause internal friction and impact customer service. It’s crucial that you anticipate and plan for internal growth challenges.
Offer opportunities for skills development, provide adequate training in line with your business’s growth and give team members the best tools for the job. A strong management team that is guided by strategic goals can help identify high-potential individuals and skills gaps.
Another note on people: if you need to hire more people to support your growth, hire for cultural fit first and skills second. Skills can be taught; alignment with your values and purpose cannot. Bad hires often result in poor performance and decreased job satisfaction across the board.
A final note on people: outsourcing to a freelancer or consultant is almost always cheaper than hiring a full-time resource. This is especially true if you don’t know what your future business needs will be, or if you only need certain skills on an ad hoc basis.
3.They manage their processes, and automate their business
One blunder that many small businesses make is not to change their systems and processes as they grow. This results in inefficiencies and wasted time, money and resources.
For example, when you only have a handful of clients, manually sending invoices and chasing payments is manageable. But when your client base grows, your accounting administration grows with it. Switch to cloud-based accounting software that lets you send invoices on the fly, automatically reminds customers their invoices are overdue, and gives you a real-time overview of your finances. The latter is crucial because it allows you to react to problems as they arise – or to see them coming and prevent them from happening in the first place.
Have processes for every aspect of your business and automate where possible. In accounting, processes include having clear payment terms, using the right collection methods, and automating quoting and invoicing.
Par for the course
Businesses operate in an environment of constant change. Markets, people, competition, technology, laws and regulations are constantly in flux. A change in one can impact everything else. A business’s goal should be sustainable growth supported by strong governance, agile and aligned teams, a clear, flexible strategy that confirms the viability of the business model and lays the foundation for its development.
