Preparing for growth - and sabotaging it instead13th July 2022
Years ago, I was invited to consult in a business that was constantly running on a shoestring and in danger of running out of money.
The business owner thought they were profitable. But looking through their very messy accounts, it took me just 30 minutes to show they were actually running a loss.
“It’s like someone has turned the light on in the room,” the business owner said to me - finally realising why his business was struggling so badly.
But here’s the kicker - and the reason why this business owner was so accepting of his faulty accounts.
Despite being at death’s door, this company was extremely busy. It employed several sales people and was winning lots of work. From the outside, it was thriving.
There’s a lesson here for your company.
Right now, I see lots of businesses getting serious about growth. Perhaps everyone’s preparing for rocky economic conditions; Maybe, after two years of COVID, businesses finally have time to plan ahead.
Either way, there is a common misunderstanding around what it really means to “prepare for growth.”
Too often, the business owners’ first instinct is to hire more salespeople and attempt to win more work.
But that can actually sabotage or destroy your company if your back-office functions are not set up correctly and working smoothly.
You’ll end up overwhelming your staff and providing a chaotic, disappointing experience to your new customers.
The back-office functions - or operations - you need to get right include HR, IT, the management of your inventory, supply chains and logistics, and so on.
But it also includes your finances.
You see, growth is not a simple process. More business means more financial complexity, higher volumes of transactions and more investment on your side.
Unless your cash is managed professionally, you risk losing track of invoices, not being paid on time, spending more than you’re bringing in, being unable to make informed, financially astute decisions, finding it difficult to finance your growth (because growth takes money!)...
...And in short, ending up in terrible financial trouble.
You should only ever bring on new salespeople and drive new business when you can cope with all the extra challenges that brings - including the financial implications.
The correct order for successful growth is:
- Get your company working completely smoothly first
- Hire new sales and marketing people after.
If you’re one of those companies looking to grow heavily in the second half of 2022, I can’t help with your HR, IT or inventory management.
But we can help you sort out the financial side of your operations. Our Outsourced Finance Department services installs all the systems and processes that corporates take for granted, and brings your financial management up to world-class standards.
Then hit ‘reply’ to this email or call us on 01279 647 447 to arrange a no-obligation chat about how we can help you maximise your profit and grow faster and more smoothly.
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