Even if you’re in the midst of growing too fast, there are some ways to alleviate those growing pains.
As you know all too well, getting a small business up and running is a major challenge. And even when your upstart business is officially “started up,” many small businesses struggle to survive their first two years. Not to mention the fact that a business growing too fast can actually be as disastrous as a business that never really takes off.
The U.S. Small Business Administration shows that about 30% of small businesses have to shut their doors within their first two years of setting up shop. While this struggle is common, you’ve surpassed this tenuous stage and your business is even growing.
The fact is, you may be experiencing the opposite problem—you’re growing at a pace that makes it tough to keep up. And you’re not alone.
Although many small businesses fail, many others are thriving. Going into 2018, small businesses anticipated growing revenues 9.1% on average. And while this kind of rapid growth is exciting, it can quickly become a stumbling block if it isn’t sustainable. When an owner and their operations can’t keep up with the pace of growth, their systems and services can break down.
There are some telltale signs that your business is growing too fast, and we’re rounding up the most common growing pains below. Even if you’re in the midst of growing too fast, there are some ways to alleviate those growing pains—and we’ll go through the most effective strategies here.
One of the first telltale symptoms of unsustainable growth is a clogged cash flow. While the demand for your products or services might be high, your business’ cash flow is lagging behind.
A cash flow crunch can create a host of other issues and is a common concern for businesses. According to a recent survey from Wasp Barcode Technologies, the majority of small businesses of all sizes said that cash flow was one of their top five obstacles.
Some of the unmistakable signs of cash flow issues include:
Multiple outstanding invoices. When unpaid invoices start stacking up, it’s easy for those outstanding payments to fall through the cracks. While you have plenty of demand, if your clients aren’t paying on time, that can leave you in the lurch when it comes to working capital. Missed payments to vendors/partners. Dropping the ball when paying your vendors is a definitive sign of cash flow issues. For example: When you need to wait for your invoices to be paid in order to pay your vendors or partners. Messy financial systems. While you may have mastered the basics of payroll and accounts receivable, the bigger your business, the more complicated your financials get. The more work you have coming in, the harder it is to keep track of sales, invoicing, and expenses in and out. And the more complex your financials, the more complicated your tax reporting (and the higher the chance of errors). But that’s where an accounting system can help.
All of the above can indicate that you have major gaps in your cash flow and likely have outgrown your current financial systems.
2. Compromised Customer Service
The second sign yourContinue reading