Unmanaged Growth Can Be Painful

Most people would love growth in their business. However, managing growth could be painful especially if it is rapid. In fact, managing growth successfully requires thought and is really hard work.

Adding employees quickly might indicate business growth. Has the infrastructure to support the integration of these new employees in the company increased simultaneously? If not, it creates a painful situation for both management and the new employees. Unaccounted or unforseen indirect costs, such as payroll taxes, benefits and insurance, could adversely impact cash flow. Rapid employment growth might also attract government scrutiny for compliance of labor regulations.

Fast growth in sales orders is a great thing. Do you have the ability to deliver those orders on time and maintain quality. Do you have an adequate customer service function to handle potential issues?

Rapid growth in revenues also means an increase in receivables (unless you are fortunate to have a cash-only business). Do you have sufficient working capital or access to funds to accommodate such an increase or even delays in collections?

While growth is exciting, Entrepreneurs need to manage it carefully to avoid or significantly mitigate the accompanying pains. Leadership requires Doing the Right Things!

Ravi Patel

www.patefCFOservices.com

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