Managing Unexpected Rapid Business Growth: A Guide for Business Owners

In a recent survey by Natwest, many businesses reported a healthy appetite for growth. In fact, two-thirds of owners surveyed (67%) reported that they were looking to grow their business and that achieving this was their top pressure point.

Rapid business growth, which we define as a year-on-year increase in sales of 20% or more, is undoubtedly an exciting phase for any business owner. It signifies success, new opportunities, progress, and of course more profit (hopefully!). However, it also comes with its own set of challenges and complexities. This can lead to various issues such as operational bottlenecks, strained resources, declining customer satisfaction and in severe cases, running out of cash which can result in a business failing. Normally, planned rapid growth comes with a good deal of planning and thought, which mitigates a good deal of the risk. However, what happens when that growth comes more unexpectedly and without plan? For the purpose of this article, we are going to focus on the aspect of rapid growth that brings the most risk; the unexpected.

What Can Create Rapid Business Growth?

Growth can be fuelled by various factors, including entering a new strategic partnership, or an unexpected increase in demand for existing products/services (think of the demand for medical protection equipment during the pandemic). Commonly it comes in the form of winning a large contract or receiving an unusually large order from a new or existing client. So, what steps should you take when you finally come down off the ceiling after receiving the news that you won it?!

Here are our nine steps to managing that unexpected order/growth:

1. Share the News With Your Team

Involve staff in discussions around the likely issues that will arise, as they are more than likely to have some of the answers! Don’t expect everyone to be as excited as you; some will just think, “Oh God - more work”! Your team are the best people to highlight the issues that may arise, so listen to them.

2. Consider the Cash Implications of the Increase In Turnover:

What will your terms of trade be? Are you having to give credit, and how much will be required to service the order?

Run credit checks on any particularly large new client, whilst also considering credit insurance.

Prepare a cash flow forecast to show the effect the jump in sales will have on your available cash.

If finance is required, approach your bank first as they know you best and can be the most cost-effective option.

3. Who Do You Rely On?

If you have to rely on suppliers/subcontractors to complete the work, can they cope with the increase? What will their price/terms be?

4. Resourcing/Capacity

Do you need to recruit additional staff, what extra/additional skills does the business require?

5. Existing Customers

Considering the effect this extra work may have on your ability to service existing clients, you may also feel that it is a good opportunity to lose some very service-hungry existing clients where little profit is achieved.

6. Technology

Consider whether new technology or AI is required to drive this increase, improve productivity, or improve processes.

7. Internal Communication

Hold regular meetings/discussions with your staff. Strong communication is vital in a rapid growth stage to identify issues early and take action to address them.

8. Don’t Take Your Eye Off the Ball

A key risk when taking on lots of new clients is that you lose sight of what’s going on in the rest of your business. Ensure that you maintain strong management of processes/KPIs to respond quickly to issues arising.

9. You Can’t Do Everything

Consider what you can delegate to free up your time to ensure you have the capacity to oversee how the growth is progressing.

You Don’t Need to Struggle With Rapid Business Growth Issues and Challenges Alone

Rapid growth provides excellent opportunities for the business and for you, the business owner. It can, however, be one of the riskiest stages for a business, having to keep your eye on a growing list of priorities. At UK Business Mentoring Group, we specialise in helping business owners scale effectively and efficiently. Reach out to us today to learn how our mentoring services can support your growth journey.