When heading into the business for the first time, the majority of business owners dread failure and hope for success. Ironically, when it comes to having a contingency plan, the majority of these entrepreneurs actually prepare for the worst. Don’t get us wrong, being ready for things to go south is a vital step of precaution, however, what if everything turns out exactly as you’ve planned? What happens when your company starts growing, outperforming your expectations and even opening new pathways that you, so far, didn’t even know existed. Well, this too can be quite dangerous, so, here are several challenges that you need to be ready for in this “best-case scenario” of yours.
1. Cash flow management
The first major issue with your income, as your company starts growing, lies in the fact that it might not reflect as great on your cash flow. For instance, imagine a scenario where you have 100 items in your inventory and manage to sell them on your first day of doing business. This is an ideal scenario, right? Well, what if your customers don’t use immediate payments but opt for credit payments instead? In that case, even though your account receivables may look admirable, you would still have to wait for the money to finally arrive. In other words, you have the money in question, on paper but, in reality, these are not the funds that you have at your disposal.
So, how do you handle this issue? Well, first, you can start by encouraging your customers to make instant payments. Second, you can find a mean to provide your business with some capital injection. Then, if you really, really, can’t wait for the cash to arrive, you can just sell some of these account receivables to a factoring company. This way, you get a major part of the full value right away and the factoring company takes the responsibility of having to wait for the credit payments to arrive.
2. Hiring new staff
When growing your business, you will find yourself in a scenario where you’re horribly understaffed. The problem with this comes from the fact that you’re unsure whether this workload increase is going to last, which means that you will also be unsure of whether hiring full-time staff members is a smart idea. Bear in mind that bringing in too many people, too quickly, means that you have to expand your office space and the fact that you might not have enough regular staff to assist in their training.
So, before making any decisions, there are several things that you need to take into consideration. For instance, when hiring, you need to address your HR and ask them about the best way to conduct this process. Second, you need to consider various alternatives to bringing in the full-time staff like hiring freelancers or telecommuters. Also, if you only need a couple of additional hands and you don’t have enough room in your current office, finding a shared office space for them might be a more cost-effective alternative.
3. Making an accurate financial projection
During the early stages of your enterprise, you need to keep in mind the fact that making an accurate financial projection isn’t a simple thing. Sure, you have the optimal and the worst-case estimate, however, this usually has a huge discrepancy and it might be quite hard for you to make an adequate assessment with so many variables changing all the time. Keep in mind that, in this scenario, it might be for the best if you were to find budgeting and profit planning specialists. This way, you’ll make your enterprise more future-proof.
4. Keeping your company culture
One of the things that happen to a lot of successful enterprises and individuals, once they face success, is the fact that it might make you lose track of your initial ideas. You see, the majority of ambitious people, the majority of those with an idea start off as idealists. They’re not in it just for the money but in order to make a difference or in order to create a legacy. Somewhere along the line, they lose track of what really matters and allow profit to become their primary motivator.
Things get even worse once you start hiring new people, seeing as how you might fail to take into account those who are a great fit for your company’s culture and merely focus on their resume. In order to stick to your ideas and ideals, you first need to find the right initial team or the right partner. For this, you shouldn’t focus on having mutual interests but on someone who actually has the same vision as you do. Interests are always the same, growth, profit and success. Vision is where a lot of people tend to have different attitudes and stances.
5. Learning how to delegate tasks
The last thing you need to understand is the importance of properly delegating tasks. First of all, if you fail to learn how and to whom you can entrust which task, you are destined to keep micro-managing everything on your own. The biggest problem with this lies in the fact that as your business keeps growing and expanding, such a thing will become increasingly difficult and, eventually, even completely impossible. Therefore, you need to start by hiring the right people and by gradually increasing the amount of responsibility that you expose them to. Once you’re 100 percent sure that they’re ready for what lies ahead, you can start relying more and more on your staff.
The very last thing you have to take into consideration is the fact that some of these problems need to be resolved long before they grow out of proportions. You see, you shouldn’t wait for a cash flow problem to halt your operations in order to start solving the issue or for your workload to exceed your capacities in order to start bringing in new people. When facing growth, you need to be proactive instead of reactive in order to make it.