Growing But Not Managing

Most people 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 your business is growing. 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 unforeseen 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

Published in: on March 15, 2016 at 4:15 am  Leave a Comment  
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Keeping Informed Effectively

As the company grows in size, Entrepreneurs should let their key managers run their departments within broad operating parameters. However,  it does not mean that the CEOs should be unaware of what is going on.

CEOs should have regular status meetings with key subordinates to review important issues in the functional areas of their responsibility. Rather than having the managers present the operational details on what is going on, the meeting should focus on accomplishments, issues, resources required, anticipated problems and solutions.

In order to make the one-on-one meeting effective, Entrepreneurs might want to set up a periodic written reporting system with their key managers so they can stay informed on the operations of their businesses before the individual meetings. Such reporting systems might include a summary of key accomplishments, planned upcoming activities and issues that might require assistance from the CEO. These reports could then be the basis of discussion in the one-on-one meetings.

A system of regularly scheduled meetings with key direct subordinates combined with a periodic reporting system allows Entrepreneurs to keep informed without micro managing their key managers on a daily basis.

Ravi Patel

www.patelCFOservices.com