Whether you’re a new business or a business with big growth aspirations, growing pains are often an inevitable part of journey. A clear growth strategy and financial planning will always help you to get ahead, but you can rarely plan for all eventualities and all too often things change along the way.
So what are the main growing pains for businesses and how can you minimise risk and maximise profitability?
As a business owner your time is precious, but how do you know how to spend your time and when is the right time to get other people involved? Undefined roles and taking on too much as a business owner is one of the biggest restrictions for business growth. It is ‘your’ business, they are ‘your’ ideas and ensuring ‘your’ goals are achieved is an important priority for you, but burning out at the wrong stage will also put a huge strain on ‘your’ business.
It’s easy to get caught up in the day to day, but seek external help so you can identify the best time to employ or contract external help. Clearly define the roles and focus as a business owner on your strongest skills.
Some businesses swear by it, while others see it as a waste of time with a clear off paper vision of where the business is heading. Adhoc planning can be great but equally dangerous as it fails to identify the bigger picture. If you are creative, which idea do you run with? If you run with then all, how do you prioritise which one is more aligned to your shorter or longer goals? When it comes to financials and growth this can mean that you miss out on important details which end up costing you money and impacting on growth.
Visibility and data
In the digital age, data is everything. Where we used to have only insight, we can now collate the evidence, interpret and manipulate a whole host of performance related data without even leaving the office. In the growth phase of your business, having the right systems and processes in place is essential. Even more important is having this in place early enough so that you can review progress and making improvements over time. One of the most powerful tools when it comes to your growth strategy, is getting the right tools in place for financial reporting. There are a vast array of online accounting tools which can help to give you the visibility you need over your accounts, look at past data and compare to present and/or your plan, and also collate a whole host of information about your business performance and profitability.
For small and growing businesses cash flow is paramount. Where one month can be bring huge incomes and low outgoings, the next month can tip the balance and make all the difference when it comes to whether you are in the black or the red. Cash Flow management is all about foresight, knowing what is coming in and building the contingency to cover the big outgoings, e.g. the dreaded quarterly VAT payment. Looking at legacy data is a great way of predicting what may happen in the future, but our advice is always to get some professional guidance when it comes to the best way to forecast and plan ahead for cashflow pitfalls.
It’s a fact of business, some people are good at management and some aren’t. If you are both Owner and Manager, getting the right balance can be even harder if you are dragged into the day to day operations of the business, this often takes away from the focus on strategy and the broader aims of the business.
Top tip; Remember to dedicate time to “work on the business, not in the business” why not set a regular time in your schedule to ensure your business is on track, e.g. Friday morning before the panic of the week closing arrives!
For effective long term growth, a clear controlled approach to your financial planning is essential and often it pays to consult with an expert to make sure you are not losing site of your Company’s direction and help to maintain your own sanity. The key to successful growth is keeping a firm grip on the progress and adjusting your strategy at the right time. Often this process can be helped by calling in experts to provide some external perspective.
For professional help and guidance from the Finance Department, contact us for more information.