The Price of success: What Challenges do Businesses face when experiencing Rapid Growth?
Wednesday 31st August 2016
While the impact of Brexit has been felt across Europe, it is British SMEs that have been most adversely impacted. In fact, business confidence in the UK has declined by an estimated 27% since Britain announced its intention to leave the EU. Even though the UK has yet to confirm its exit plan or even trigger the contentious Article 50, it is arguable that the uncertainty surrounding Britain’s future and its role within the Union is causing even greater consternation.
This is a universal issue that is impacting on businesses in the UK, but it is not as though small and medium-sized firms do not have their own problems to contend with. Each commercial venture has its own fundamental challenges to overcome, depending on its scope, nature and the market that it operates in. Some may even find that they are expanding at a rapid and unsustainable rate, for example, which can actually have an adverse impact on their long-term growth.
What are the main challenges that Businesses face through Rapid Growth?
While this may not sound like a problem, it is something that can truly undermine unsuspecting businesses if it is not managed successfully. Here are three of the main issues that fast-growing businesses face and tips for overcoming them: -
- A Lack of Cash Flow
The single biggest issue that fast-growing businesses face is cash-flow, which if not managed carefully can prevent firms from executing orders. The issue arises in line with rising demand, as you are forced to suddenly undertake higher volume of work while adhering to standard invoice terms (sometimes in excess of 30 days). So while you may be forced to invest in additional stock, material and human resources to complete the work, you may not have the necessary funds to support such a drive.
It is important that you find a viable method of supporting your unexpected growth, without encumbering the venture with unmanageable debt. Service providers such as Ebury may be able to assist through a variety of unsecured lending options, which boost your working capital and help to fund supplier payments earlier on during the business cycle. It is important to consider these options, as this will help you to cope with demand while improving your businesses infrastructure.
- Overhead costs and Commercial Premises
As your business expands, you may also find that you begin to outgrow your commercial premises. This is extremely problematic, particularly in instances when you are not sure about the longevity of the growth. Do you continue to struggle or a small or restricted space, or should you instead invest in a long-term lease on a larger property?
Fortunately, there are other alternatives available in the modern age. If you are a retail business, for example, you could consider leasing a pop-up outlet on a rolling contract. This will minimise costs and risk, while also allowing you to benefit from considerable foot-fall in a busy space. Similarly, there are impermanent office and warehouse structures that can be hired for as long as you need, as you look to manage existing demand while forging concrete, long-term plans.
- The Recruitment of Talent
On a similar note, you will certainly need to hire more staff and expand your team quickly if you are to cope with sudden growth. Increasing your annual wage bill is a considerable risk in the existing business and economic climate, however, so it is worth considering flexible alternatives that drive productivity while enabling your venture to retain its adaptability.
The best strategy is to employ freelancers and independent contractors wherever possible, as this allows you to create a skilled and motivated that is tailored to suit the real-time demand that exists within your business. The key is to engage these temporary employees with your brand and introduce documents such as NDA (non-disclosure agreements) as this will help you to strike the balance between creating trust and protecting your brand.
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Editorial Contact Details - Conor Shilling