Managing finances in a fast-growing business can be challenging. It’s easy to get caught up in daily business operations and forget that it’s vital to take an overall look at the financial situation of your company.
The good news is that companies can mitigate or even avoid these financial risks from happening at all. Several financial strategies can help ensure your growth continues on a steady path, and a few of them are listed below.
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Cash Flow Management
Cash flow management is crucial for any business, but it’s especially important for fast-growing companies.
Fast growth means you’re collecting more money than you’re spending, which means there’s more cash in the bank. But that also means you have larger bills to pay and more people to pay them to—and if those bills are due regularly, they’re going to drain your bank account faster than ever before.
Managing cash flow is also one of the reasons why every successful company eventually makes sure its employees get paid weekly or bi-weekly instead of waiting until month-end. This strategy isn’t just about helping employees feel more secure.
It’s also about ensuring they have enough cash on hand so that they keep coming back for their next paycheck without putting the company at risk of falling behind on its obligations.
Focus on Operational Improvement and Sales
One of the most important keys to growing a business is keeping a laser-like focus on what you can control. That means giving persistent attention to operational improvements and sales, with variable attention focused on growth.
As a company grows, it’s easy to get distracted by all the other moving parts that come along with it. For example, if your company is already at $10 million in revenue and you’re looking at how to grow from there, it may seem like you need more people or new offices, or bigger budgets for marketing campaigns. But you need operational excellence and sales velocity—and your growth will follow naturally from those things.
Focus on what matters most. These include your strengths as an entrepreneur in driving innovation, refining processes for better efficiency, building great teams around these things, solving problems creatively, and always pushing yourself further.
The first step to increasing profitability is to focus on the things that make your business money. It can be defined in many ways, such as:
- Identifying your core product or service, finding out how to make it better, and then doing so;
- Ensuring you’re in a position to make money, like having an efficient sales team and strong marketing tactics in place, so people buy what you’re selling; and
- Spending wisely – which includes being careful with expenses like rent or payroll, keeping track of every dollar spent or earned, and analyzing which areas of your budget are giving back more than they cost (as opposed to just looking at the overall profit).
Once you have these three areas under control, consider cutting costs. Try outsourcing some tasks if they aren’t necessary for day-to-day operations. On top of this cost reduction strategy should also be an increase in revenue generation, which can be done by:
- increasing prices
- selling more units
- earning more from existing clients
- finding new customers through advertising campaigns or other initiatives that generate leads
Finally (perhaps most importantly), don’t be afraid to try both at once. Improving efficiency while also increasing profitability is a great way for any company seeking long-term success!
Prepare for the Unexpected
The best business owners know there’s no such thing as a sure thing. While you may have planned for your business to grow in a certain way and at a certain rate, things often don’t go according to plan. But that’s fine. Instead, stay ahead of the curve and ensure financial preparedness.
Have a contingency plan to manage your finances while keeping up with your business’s demands. Make sure every dollar counts toward helping grow your company—even if it doesn’t seem like it at first glance.
However, don’t just track how much money you bring each month and your quarterly expenses. Ensure you have cash on hand for emergency expenses or unanticipated events (like an employee quitting). It’s particularly important if you’ve recently gone through another growth spurt.
Seek Professional Help
Sometimes the simplest solution to a problem is to ask for help. You don’t have to solve everything on your own, and you shouldn’t feel bad about seeking support when it comes time to crunch numbers.
For example, consider hiring a business coach or consultant specializing in business growth strategies. They can help you understand and solve entrepreneurs’ common challenges when growing their businesses.
Financial Advisors Can Help A Lot Too.
For instance, if your growing e-commerce business in Wichita needs financing, but you’re very new to the area, financial advisors can help you with some affordable loans in Kansas City, KS. They can help you manage assets, revenue streams, expenses, cash flow, investments, taxes, and insurance needs.
As your business grows, you’ll have to deal with the challenges. These include managing multiple employees, implementing new technologies and strategies, and making crucial decisions that impact your company’s yearly money. But it’s rewarding, especially if you can successfully navigate these challenges and become a thriving enterprise in the industry.