Small business owners dealing with rapid growth may be looking for strategies to manage it effectively. In some cases, rapid growth can actually hurt a business by bringing on changes too quickly, such as orders climbing too high for the company to fulfill. Fast growth in a business requires a successful financial strategy, increased cash flow and solid growth planning.

You may find that you lack the cash to cover everyday financial obligations like bills and payroll when your business grows rapidly. Follow our tips for business growth management to keep your finances under control.

8 Tips for Business Growth Management

Greater production volumes and more customers come with an increase in overhead and personnel requirements, sometimes faster than you anticipated. The tips below can help you manage rapid business growth.

1. Create a Growth Plan and Objectives

Every business, regardless of size, should create a plan to handle growth strategically. To determine your objectives, consider the following questions:

  • How quickly are you hiring?
  • Are you collecting receivables quickly enough?
  • Can your management team handle the growth?
  • How efficient is your production line?
  • Is your inventory in line with your company’s growth?
  • How quickly are you currently expanding?
  • Is your growth making your business more profitable?
  • How well are you managing your cash flow?
  • Do you have the capital necessary to finance your company’s growth?

Analyze how you are managing your business and how you can increase your control over the factors influencing your overhead, assets, inventory and receivables. For example, if your inventory is taking up too much of your company’s cash flow, you will want to take steps to address that.

Analyzing your growth management can help you identify your financing requirements and avoid liquidity issues in the future. Your growth plan should allow you to understand your company’s opportunities and risks.

2. Uncover the Source of Growth

Once you’ve noticed a surge in your business’s growth, determine its source. In some cases, it may stem from a one-time occurrence, such as a single successful project. In other cases, the growth may be from sustainable momentum.

You need to uncover the source of the growth to ensure you can maintain it. For example, if it is coming from a marketing campaign, you will want to continue investing your efforts and resources there. Lean into what is working to keep your company growing sustainably.

determine how much cash you need to sustain growth

3. Determine How Much Cash You Need to Sustain Growth

Once you have determined that your company is growing sustainably and not experiencing one-time or seasonal growth, identify how much cash you need to sustain that growth. Analyze your cash outflow and inflow to forecast your requirements. When you know your future cash requirements, you can assess your company’s current financial situation and determine whether you need to make improvements. You may be able to convert unused assets to cash, restructure debt or obtain additional financing for more working capital.

4. Find Ways to Improve Liquidity and Cash Flow

Invoice factoring is an excellent way for your business to improve its cash flow. While accounts receivable (AR) financing lets you use your invoices as collateral to secure a loan, invoice factoring lets you sell your invoices to a factoring company directly. When you sell your unpaid invoices, you receive cash in return that you can use to improve your liquidity and cash flow. Advantages of working with an invoice factoring firm include:

  • Competitive rates.
  • Increased cash flow.
  • Flexible solutions for financing.

5. Control Costs and Debt

You may want to look into alternatives to traditional debt financing that let you negotiate better payment schedules. You can also consider the advantages of leasing over buying an asset. With thorough planning, you may be able to control your:

  • Costs: You can address overhead costs like rent, office supplies and equipment by streamlining your expenses, letting you set goals for cutting costs for these items. Companies tend to increase spending during growth spurts, so it’s essential to maintain your cost controls at this time.
  • Debt: Financial institutions can view a high-growth business as a greater risk. By controlling your debt, you can ensure that lenders view you as a viable borrower and provide the financing you need for your business growth goals.

6. Be Cautious of Overhiring

Hiring too many employees too quickly could put a significant strain on your company’s payroll before you’re ready to sustain it. You may want to hire temporary workers, freelancers or contractors while determining your exact staffing needs. If you take this route, ensure you are complying with employment laws.

7. Turn to Refinancing Options

Refinancing may allow you to make lower monthly payments and spread them across a more extended period, making the debt easier to repay. A refinancing application is similar to an application for financing — your business may need to meet specific eligibility requirements and adhere to repayment requirements. Lenders typically don’t want to take on an excessive amount of risk, so your business must be able to demonstrate its ability to repay the debt.

8. Continue Providing an Excellent Customer Experience

When your business is growing, it can be tempting to try to serve as many customers as you can. However, it’s essential to continue providing an excellent customer experience for every individual. If you take on too many new customers at once, you may not be able to maintain the quality of your service. Exceeding customer expectations is essential for getting return customers and maintaining a solid company reputation.

Acquiring new customers is more costly than retaining existing ones, so be sure to prioritize giving your current customers the best quality experience and service. To do so, you can hire new employees, slow the pace of your business growth or implement new technology to streamline your operations.

Porter Capital Can Help Improve Your Small Business Cash Flow

Founded in 1991 in Birmingham, Alabama, Porter Capital provides funding for all the ways you do business. We offer both invoice factoring and AR financing to help improve your small business’s cash flow.

Your business can get funding in just 24 hours and may be eligible for rates as low as 0.75%. Our application process is easy, and we approve applications quickly — there are no hidden terms or fees when you work with us. Contact us at Porter Capital to learn more about how to manage business growth and how invoice factoring can improve your cash flow.

Porter Capital can help improve your small business cash flow