Business growth is a key indicator of business success.
Organic growth, mergers and acquisitions, entering new markets, investing in new technologies and forming strategic partnerships can all lead to positive progress and exciting new opportunities for your organization.
However, with these opportunities naturally come complexities with which your organization may not have experience. Managing your growth well is key to sustainable success, but in a fast-paced season of expansion, putting out daily fires can easily take precedence over establishing sound practices for the long haul.
If your company is growing quickly, consider these four strategies to effectively navigate complexities and set your organization up for lasting success.
1. Focus on Financial Health
If your organization is growing, it’s essential to understand your key financial metrics and to track them often. Begin by regularly reviewing your balance sheet metrics and keep a close eye on your cash flow statement.
By focusing on cash flow consistently, you can ensure that your company has the necessary working capital to support growth, make informed decisions about your investments and avoid potential cash flow issues that could hinder your growth. This can help you to more effectively balance risk-taking with cautious planning, ensuring sustainable progress and financial health.
It’s also critical to track your profit and loss metrics, such as growth rate, sales pipeline, backlog, gross profit, net profit and overhead. These metrics can provide a comprehensive view of the company’s financial health during your season of growth, allowing you to assess the efficiency of operations, the effectiveness of sales strategies and the overall profitability of the business.
By regularly (and accurately) measuring the financial health of the organization, you can more effectively adjust your plans, identify potential problems and create more realistic plans for your business.
2. Adapt the Leaders’ Roles
As any business grows, its leadership must adjust. The larger your organization becomes, the less practical (and less productive) it is for your primary leaders to coordinate the minutia of the company’s operations. If your business is growing, the owner or executives must shift from working in the business to working on the business.
For an individual founder of a startup, that may look like being less involved in product development and customer service tasks and being more focused on identifying opportunities to incorporate innovative technologies or building a strong long-term business plan.
For growing organizations that already have more robust operations and a full leadership team (or C-suite), this may involve delegating routine or administrative tasks and empowering your team members to take on more responsibilities or even assume their own leadership roles with the company.
No matter your specific situation, a season of growth for your company should be a key indicator that it’s time to reevaluate your leaders’ responsibilities and activities to be sure their time is being used in the most effective way. Focus on coordinating the big picture rather than getting caught up in the details.
3. Start Succession and Continuity Planning Early
Succession planning is crucial during a season of business growth because it ensures that the business remains stable as operations become more complex and as the roles of key individuals change.
Most businesses that are expanding are likely working through natural and temporary growing pains. But minor difficulties can be exacerbated into a crisis if combined with other serious events. Having a robust succession and continuity plan in place throughout your company’s growth helps mitigate the big risks that could come with the sudden loss of key personnel or an unforeseen disaster.
Additionally, having a strong succession plan can support the long-term strategic goals of the company by preparing the organization for future leadership transitions and maintaining investor and stakeholder confidence.
Develop a succession plan that includes both positive outlooks and disaster recovery scenarios, and adapt your plans based on changing circumstances. Consider scheduling annual reviews of your succession plan to ensure it always remains relevant in light of the business environment and the circumstances of its leaders.
4. Anticipate the Transition Out of Growth
One of the most important keys to navigating growth well is being able to identify when your growth phase is slowing—or even ending.
When you see indicators that your company is shifting from aggressive expansion to a more established and stable phase (changing revenue growth and working capital needs), it’s important to adjust your strategy in response.
Continuing growth strategies despite financial signs that growth is slowing can be risky. Pivoting your approach as your growth slows can avoid financial strain, wasted resources, operational inefficiencies or burning out your team members.
This transition allows the company to focus on maintaining its market position and optimizing operations rather than continuing to pursue rapid growth.
Learn More About Navigating Business Growth
Growth is an exciting phase in a business’s life cycle, but it can also be a challenge to create scalable operations, establish strong financial health and adjust a founder or executive’s roles. To learn more about how your unique company can effectively navigate these challenges throughout your organization’s growth phase, reach out to your Warren Averett advisor directly, or ask a member of our team to reach out to you.
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