My Business is Growing!
Scaling Up – An Overview
Throughout the growth stage, your business will encounter many challenges. It may seem any early problems you had to overcome were minor in comparison to these challenges, but the truth is it’s all relevant.
It’s therefore important that processes and procedures are in place which will support your business as it grows, and that these processes are underpinned by a solid business model.
As your business grows, there are several things you must consider. Some of the key things would include:
- Financial reporting, bookkeeping, and accounting
- Monitoring business performance and KPIs
- Systems and processes
- Cashflow, budgeting, and forecasting
- Governance, responsibilities, and procedures
Financial Reporting
This covers everything from basic bookkeeping processes, review of financial performance, comparison with targets and using the data captured to make future business decisions. The process around bookkeeping and the capturing of financial information is the foundation that the financial reporting will be built upon, and you must give it the investment it deserves. Having good data is critical to knowing how your business is performing at any given time. The days of waiting six months after the year end to know if you are making money are well and truly over.
Consider cloud accounting solutions and data capture software to assist with the processing of purchase invoices, and build a strong relationship with an accountant that understands what your needs are. Don’t see this as a cost, but as an another important investment.
Cashflow
Regardless of profits, cashflow (or lack thereof) is what will mean your business survives or fails. It’s really that important.
You should develop a cashflow budget and monitor it weekly, updating for actual income & expenditure, and adjusting the budget going forward to take account of what has actually happened. Ensure you are giving your business the best chance by implementing good cash management practices, such as:
- Good bookkeeping/sales invoice software to ensure timely payment of invoices
- Agree terms with customers upfront
- Credit control procedures (this is not just for late payers)
- Make it easy for customers to pay – use technology to your advantage
Don’t fool yourself, if the business plan and budget says your business needs cash to grow and that is the plan you are implementing, you need to get finance. Talk to your Adviser and come up with a plan.
Monitoring performance
Develop simple key performance indicators (KPIs) to monitor performance, and be proactive in better understanding your financial business model.
This may take time with your accountant, but it will be time very well spent. You will then be well placed to measure the business performance against the KPIs.
Governance
A crucial step in the journey from a self-employed individual to a fully fledged business owner is moving from the mindset of being a ‘doer’ to a leader.
You must learn to delegate effectively, and confidently rely on others to do their part in driving the business forward.
What’s more, you need to ensure the proper controls are put in place throughout your business. Structured reporting and management meetings with your employees will keep them accountable for their responsibilities, while important controls around finance will help you avoid waste or fraud from occurring.
This may be a stage where you consider involving some additional expertise in the form of third party board members. Of course, this would be a very important decision and one that should not be taken lightly as the Board of Directors run the company on behalf of the shareholders. That being said, a board member with expertise in an area that you are trying to develop in may bring great benefits to the company in the form of experience and contacts.
Tip: If there are multiple business owners (shareholders), a shareholders agreement should be put in place. The shareholders agreement will assist in dealing with difficult issues such as dispute and exit, and may assist in unnecessary and distracting legal situations at a future date.
For more business advice/tips check out our resources page.
