As an entrepreneur, the most attractive word to our ears is growth. We want it to be high because in our minds that means a successful business. It makes perfect sense - if you were unsuccessful you definitely wouldn't... so the opposite must be true!
Unfortunately, many entrepreneurs have learned it hard way that growth management is a two edge sword. If you initiate it in a phase, it's typically because you are doing something’right. You effectively execute sales, you deliver your products or services that will in return grant you success. But what happens if the middle link of that chain weakens (or even breaks)? Growth kills your business...
Many businesses when they are under going this phase face a number of challenges ranging from-man power, service over runs, luck of proper mechanisms to cope with increase in demand and so on and so forth.
If the entrepreneur incorrectly hires, they hurts the business by having excess capacity sitting on the bench and not generating the need sales. If the entrepreneur incorrectly rides the storm, the firm suffers by having stressed employees, lower quality, and even a damaged reputation. This tricky balance is what makes the world 'growth' a very difficult process to manage - especially as a small business.
Below are some important guide-lines on how to manage growth:
Whenever possible, try to establish credit lines that will go along with the business. For example, in setting up a credit line with your bank, try to get a credit line based on a percentage of your receivables, rather than a constant, static amount. Chances are your credit line will be reviewed by your bank annually and will be subject to ceilings and restrictions, but try to build as much flexibility into your borrowing relationships as you can. Also try to establish credit lines with your trade suppliers that grow along with your business as well.Watch non-financial limits
Because money, or rather the lack of it, is such an overwhelming impediment to financial freedom, it is easy to overlook other issues that may limit your ability to develop your business. You might feel that some people on your staff, your computer system, your facilities. If so, don’t hesitate to slow down the pace of business development for a while until you feel that component of your operations is running smoothly again. It takes a wise, disciplined manager to hold back on unbridled expansion to ensure that the company can continue to deliver quality products in a professional manner.Add systems and procedures
As your business grows, you won’t be able to spend as much time personally checking over details as you did initially. So, set up systems and procedures that will help you be sure that management and staff are continually making checks in the same manner you would have. Maybe, for example, you need to set specific product quality control standards. Or maybe you need to set up purchasing procedures. The more your day-to-day business operations rely on systems and procedures, the more growth you will be able to effectively achieve.Use ROI criteria to determine which investments to pursue
Because a fast-growing business often has more profitable options to pursue than it has money, a decision must be made as to which options should be pursued. One way to determine which options offer the best opportunities for success is to select those with the highest return on investment (ROI). A simplified example is that of a store trying to decide which of two different product lines with equal profit margins to carry. Using ROI criteria, the store may decide to carry the product line that sells faster because its money or investment will be tied up for a shorter period of time, giving a higher return on the investment.
There are many, many strategies to managing your business development. The most valuable advice is for you to actually sit down and analyze your business. Determine your growth, how it is affecting you, and what steps you need to take to cope.
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