January 2008

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Avoid the hazards of rapid business growth

January, 2008

Your fledgling business has been plodding along, barely keeping its head above water, then wham! A fortuitous set of circumstances or a huge contract with a strategically placed customer suddenly skyrockets your firm to the forefront of the marketplace. Super! You've finally achieved success! Or perhaps your business is headed for the graveyard.

Whether your business benefits from rapid growth or begins the long slide toward bankruptcy can depend on numerous factors — some of which you can't control, many of which you can. Often business owners find that the ultimate success or failure of their firm is determined during this most crucial phase of rapid growth. Following are a few suggestions to keep your company on track and headed upward when those orders start rolling in:

  • Maintain a long-term vision. When you're struggling to meet increasing orders or dealing with the headaches of adding personnel, it's easy to lose track of why you started the business in the first place. It's especially important during growth periods to refocus on your firm's core values and strategic mission. Your vision should dictate your day-to-day operations, not the other way around.
  • Plan for growth. Larger businesses have needs that differ from start-ups. For example, accounting systems may need to be replaced to handle greater volume and more complex transactions. Staff structure and size should be reviewed to establish the best organizational structure for continued growth. Sales projections, marketing strategies, customer demographics, and supplier relationships are just a few of the business areas that warrant examination during a growth phase.
  • Work with lenders. Be sure to keep your banker in the loop during periods of rapid growth. An experienced and flexible lender can be one of your most valuable allies as you look toward new business opportunities. For example, you may find that suppliers need more up-front cash to deliver additional goods. An understanding lender can often provide larger lines of credit to keep cash flows stable and customers and vendors satisfied.
  • Acquire with care. Businesses often expand by purchasing other firms in the same or different markets. This strategy is fraught with danger for a fledgling business. If your business plan includes acquisitions, it makes sense to get expert advice.

Periods of significant growth can be exciting and rewarding for business owners. But long-term success often goes to those who keep a clear vision and seek professional help when needed.

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