What If Your Business Grows Too Fast?

What if your sales doubled overnight? A sudden surge in sales can seem like a dream come true for small businesses, but in reality, it can be a nightmare if the business is not designed to handle everything that comes with the increased sales. 

Some of the issues small businesses run into include:

• Delays in quoting, production and customer service
• Inability to get supplies or have enough manpower
• Cash flow shortages due to investing in cost of goods, people, or even equipment to create and deliver on the increased sales
• Increase in overtime and burnout of employees leading to turnover
• Quality issues both with the product/service and in the delivery of your promise
• Decrease in reputation and increase in negative reviews

What small businesses need is a solid foundation that allows them to scale their business. Interestingly, many of the elements that create a solid foundation to grow are also the elements that increase the value of the business. In creating this foundation, you not only set your business up for success now, but also when it’s time for you to exit the business. 

Consider the following questions:

• Can you easily hire, onboard and train new employees? If your business is overly dependent on key employees to quote, create your product/service or deliver customer service, then you have a capacity issue. The business will only be able to grow to the bandwidth of those employees or there will be a delay in growth while you find, hire and train others to do what you do. A well-designed business is always looking for new employees, has a hiring strategy in place, has documented systems including a training path for all positions. Don’t forget that outsourcing can be a solution to handle a growth spurt.
   
• Is your Quality Control a well-oiled machine? When growth is sudden, it’s easy to lose focus on quality, especially if your quality is dependent on people. Establishing systemized quality control can ensure that even if sales triple, the right checks and balances are in place to protect the company’s reputation.
   
• Could your vendors keep up? If your vendors can’t keep up with what you need to create and deliver your products and services, the growth can be painful. It’s good to identify the vendors that you rely on to create and deliver your products/services. Once you’ve identified the vendors that are crucial to growth, baseline their ability to grow with you. Then, begin to identify new vendors that you could start to use if needed.
   
• Do you have a cash cushion or line of credit? Small businesses often wait till it’s needed to get a line of credit. Which means in a pinch you may be delayed in getting the cash needed to finance growth. There are many steps a business can take to build a cash cushion including: cleaning up accounts receivable, designing your contracts or purchases so that your company isn’t financing clients, investing cash on hand to maximize its results, and establishing a line of credit so that it’s ready to go as needed.

Set your business up for success and begin creating your foundation to scale today.