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How to effectively manage rapid business growth

In this piece, our finance director, Simon Wilmett, discusses how to overcome the most common issues that may arise during a period of rapid business growth:
For an ambitious entrepreneur, the mantra “slow and steady wins the race” might not be the most appealing. However, the journey towards business growth is often not without cost. The faster you grow your business, the greater the risk of failure, unless you are aware of the pitfalls that may await and how to overcome them.

Here are my top tips to grow your business quickly and sustainably:

1. Never Ignore Your Finances

One of the most common mistakes we see entrepreneurs make is taking their eye off their finances, particularly during periods of rapid growth. They become so preoccupied with managing the rest of their business that the financial situation of the company takes a back seat. As your business expands, your cash flow will become increasingly complicated to the point you cannot keep track in your head or with just the occasional check.  You need someone doing this full time if you want to scale. You need to know the numbers and what is coming in and out of your business to ensure you are operating to your full potential. Cultivate a closer relationship with your finance experts – after all, they are the experts.

2. Look Beyond Sales

Whilst making sales is the key source of revenue for any business, it is important to understand that in a growing business, outgoings can very quickly exceed income, even with healthy sales growth. Whilst it is tempting to increase spending once the orders start coming in, be sure not to take your eye off the quality of your service. Your existing customers are also at the core of your business and maintaining a happy customer base is key to sustained growth.

3. Are You Targeting the Right Acquisition Channels?

Whilst you need to be targeting the right channels to attract customers, ensure you are spending money in the right places. How well do you understand your audience, targets and how to reach them? Whilst referrals are fantastic, all too often we see entrepreneurs throwing money after channels with little understanding of their goals and return. Even during periods of rapid growth it is important to keep focused on your business plan. Ensure cost effectiveness when choosing your acquisition channels and allocate test budgets to try new channels before committing fully.

4. Always Validate Your Organisational Growth

Whilst it is human nature to get carried away during successful periods, it is important not to put teams in place or spend on infrastructure until your cash flow is secure. Fast and lucrative growth can be exciting, but you should validate your existing business and goals before taking any major steps. Remember that whilst founders generally take a step back to positions of leadership rather than operations following growth, making sure your operation still runs effectively is crucial. Always bear in mind that the speed of your business growth could be mirrored in its fall, so make sure you place someone you trust in charge of operations and make sensible spending decisions.

5. Recruit for Culture

Rapid growth runs the risk of rapid recruitment decisions. This causes issues in that you may be hiring staff who either do not have the skills you need or do not fit your company’s culture. Alongside this growth, ensure that your current staff feel settled and secure as change can make staff feel on edge. If your current employees are not settled before making sweeping changes you may find they are looking for new jobs before long.

6. Choose Your Suppliers Wisely

Make sure to do your due diligence on suppliers before working with them as picking the wrong partners can become very costly. All deals should be set up to be mutually beneficial with clear incentives. Do not be afraid to negotiate and fight for the best deal for your business.

7. Seeking Finance

Whilst finance is often seen as a last resort for businesses, it can be just as handy to facilitate your business’ future growth. Ensure you have a clear, long-term growth strategy with realistic objectives and milestones in place. Naturally, you will be excited to expand on your existing growth, but by ensuring a solid foundation and that objectives and KPIs are agreed upon within realistic timeframes, you increase your opportunity for sustained success. Remember, finance is best used to meet long-term growth goals, not short-term fixes. 

Our products and services come with guaranteed expertise, honesty and certainty. If you’d like to find out more, please contact one of our credit specialists on 0207 839 1980 or email contact@nucleus-cf.co.uk.

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