Small businesses deal with the “too much, too soon” condition when they grow rapidly. Well-executed and well-planned businesses can easily handle rapid growth. For small ones, rapid growth can be challenging in many ways, such as in bookkeeping, budgeting, technological aspects, and increasing financial risk management (FRM). When the companies become successfully developed, they may experience challenges beyond their capability. If you are not aware of the challenges that may arise from rapid growth, it could be hazardous to your business. We will discuss a few of those challenges below.
A Cash Flow Crisis
A cash flow crisis can bring down the flagship of finance because the rapid growth creates difficulty in managing the business and less cash availability. In this situation, the company may depend on loans so that owner can develop more and more profits. To control cash flow crises, businesses must have a reinvestment plan by which they can generate money for their business without going into more debt.
Growth May Not Be On Solid Ground
A rapidly expanded business is usually based on impulse rather than a solid financial evaluation, economic analysis, or market study. In many cases, the rapid growth of a small business is a consequence of the proprietor’s own desire and personal satisfaction rather than an actual understanding of the business’s capabilities. Consequently, impulsive businesses tend to charge higher and take advantage of quick opportunities even if they do not have the needed capital for the task. Hence, less capitalization leads to their downfall.
Difficulty in Serving Loans
Loans attained for expansion are much larger, so much so that servicing them brings an end to the firm’s earlier developed cash flow. Moreover, many rising businesses experience challenges in budgeting despite major growth in sales. The financial suffering could then bleed the business dry.
Hopefully, complaints from customers are infrequent. However, when you receive a swarm of negative feedback from customers, this suggests that you are not fulfilling the criteria of your client’s expectations. It can happen when there is little to no interaction with the actual client or when your staff may not be large enough to meet each buyer’s demands. Satisfied clients give positive feedback and come to you again and again. Negative reviews from customers show that you are not able to cope with the expectation of the market. Instead, make it a habit of checking your feedback system daily, continue to monitor your social media accounts, and make a flexible plan to deal with negative and positive feedback.
Internal Systems and Procedures May Not Catch Up
Bureaucracy backs its head in the shape of meetings, buck-passing, and memos – more compounded by flawed information and monitoring systems. Rising businesses must be able to achieve information (competition, internal costs, and budget, cash flow, inventory controls, bookkeeping tasks, sales growth, etc.) in a well-timed, organized and competent manner.
Your Employees are Overworked
A flexible working environment leads to productive work efficiency. But, when a comfortable working atmosphere is not given, there is a serious risk of losing trusted and trained employees. You must pay attention to engage and enhance your working culture as the business grows. Arrange staff meetings to discuss their issues, give positive feedback, and get on the same page.
Your Ability to Lead and Manage Falters
As the company grows, the creators ultimately evolve in the role of leadership, eventually assigning work decisions and duties to someone else. However, rapid growth can drop your focus from your essential functions and bring many tasks to sub-par. This will lead to irritation within your firm and dissatisfaction for your customers.
Rapid growth in an organization is only possible when all its organs are working properly in a harmonious manner. To lead all departments efficiently, it is necessary to train your employees through several certifications and courses designed to improve the overall health of your company. Moreover, budgeting is an effective tool to organize all priorities in a way to generate higher profits.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.