If you own a fast-growing business, congratulations! It takes a lot of hard work and dedication to come this far. Now that you’ve achieved new heights, it’s incredibly important to manage your small business growth effectively. Investing in your overall strategy can help you avoid rapid business growth problems and give you the power to be in control of your own destiny not only when looking at the big picture, but in your day to day operations as well.
1. Define growth objectives
Take a strategic approach to growing your business. Don’t forget to take a step back and ask yourself the big-picture questions so that you can define the objectives that matter most to you.
For example, start with some of these questions:
- Is my business set up for success?
- How’s my cash flow management?
- Am I growing at a steady, profitable rate?
- Is my inventory supply aligned with my business expansion?
- Is my hiring rate right for my business?
2. Analyze your growth
Understanding which elements of the business are under your control can help you take charge of your cash flow. Start by conducting a comprehensive company growth analysis. A full deep dive will include elements like your sales, overhead, inventory, assets, and accounts.
Look back at all the data you have from the first day of operation and consider the processes that are contributing the most toward your finances. That way, you can determine what has the strongest impact on your cash flow. If it’s inventory, for example, some more attention to inventory management can help you get a tighter grip on your stock and avoid both shortages and surpluses.
3. Account for seasonal impact
Don’t forget the seasonal trends! These changes in customer behavior might not be accounted for in your growth plan if you don’t pay attention to them. Verify that your growth is steady, long-term, and sustainable, and keep any natural patterns top of mind. It can help to research your specific industry to get a sense of the typical ups and downs you might face throughout the year. This way, you won’t mistake normally high performing months for growth spurts or typically slower months for a decline.
4. Prepare a growth strategy
Now that you’re equipped with some of the solid background knowledge you’ll need, get ready to prepare a growth strategy that makes the most sense for you. When you’re presented with potential next steps for your growing business, you’ll be able to assess the real risks and benefits of the opportunity.
5. Forecast your finances and working capital
Getting an accurate forecast of the cash flowing in and out of your business can help you make critical decisions. If you have all the information you need from the start, it can inform your overall strategy as you continue to grow. Don’t forget to update your forecasts based on new information coming in so you can feel confident that you’re using the most accurate predictions.
By going through this analytical process, you might find that you can use some additional working capital or refinance high-cost debt to improve your bottom line. If you’re looking for additional insight into your company’s financial health, get started with SmartBiz Advisor today. This free, online tool will be your Intelligent CFO and help you find out where you stand when it comes to applying for additional, low-cost financing for your small business.
6. Analyze accounts payable and receivable
Your accounts will give you insight into your business liquidity. Let’s start with the accounts receivable. To make sure you’re on top of them, here are some steps you can put into practice:
- Clearly define your payment terms for your products or services
- Use reliable collection tools
- Closely monitor your payment processes, times, and details
- Ensure that any issues are addressed as soon as possible
When it comes to accounts payable, these are some key questions to ask yourself:
- Which method or approach is your small business using to manage its inventory supply?
- How is your forecasting supporting the systems you have in place?
- How timely are you in your payments to suppliers, vendors, and other partners?
- How much interest are you paying?
Don’t hesitate to come back to these questions regularly. All of these considerations can help you pinpoint the specific areas where you can improve your cash flow. With a growing company on your hands, you’ll need to know how to scale it properly, which means continuing to adjust and optimize as you reach new heights.
7. Define a quality control system
No matter how fast it’s growing, your business should continue to maintain a certain standard in terms of quality. What once was a no-brainer might become more involved with more customers, a larger team, and a more complex structure. To account for the natural changes that come with business development, make sure you have a defined quality control system that the whole team is aligned on.
When you start expanding, hiring a management team can help you with overseeing operations within the company. An experienced manager will be responsible for the team’s performance, which also means the product’s quality. Only you’ll know how many managers you need for your specific team. Striking the perfect balance will help you achieve efficiency and productivity while still keeping your product quality top-notch.
For more helpful tips and recommendations, head to the SmartBiz Small Business Blog. Did you know? If you search for Business Finances, you’ll find in-depth articles all about taking control of your business’s financial health.