While business growth is regarded as a measure of success and something to be pursued, it can also present its own set of problems and challenges.
People in business generally have limited resources and this can increase the risks, especially where growth occurs quickly or is unplanned.
Management of growth
Management of growth means understanding the implications of your business expanding. Consider these questions:
- How much growth is anticipated?
- Where is growth likely to affect your business?
- When will growth occur?
- Where is your business already under pressure?
- What are the current weaknesses of your business?
- Will current weaknesses be made worse by the pressures of expansion?
Remaining constantly on the lookout for signs that your business may be veering out of control means you have a better chance of anticipating and overcoming problems.
How growth impacts on a business
Managing growth in a planned, systematic way is a vital part of business success. Pay particular attention to cash, human resources, time, physical assets and information flows.
Uncontrolled growth can lead to failure by weakening business resources - too many sales, made too fast, can sometimes spell the end of a business.
| Area of business |
Potential impact |
| Cash |
|
| Trade credit |
|
| Borrowings |
- additional external borrowings may need to be arranged
- ability to service the increased commitment will need to be assessed
|
| Increased paper flow |
- direct result of increased trading volume
|
| Internal accounting and administrative procedures |
- will come under pressure and may need to be upgraded – eg control of inventories, customer billing and debtors records and operating procedures
|
| Costs |
- need to estimate increased capital costs, what ongoing expenditures are likely to increase and what new ones will be incurred
|
| Existing staff |
- will have responsibility for additional tasks of growing complexity
|
| Staff recruitment |
- additional staff will need to be recruited, with implications for training and supervision
|
| Business proprietor |
- you will be required to move away from a hands-on approach to concentrate full-time on management in such areas as staff relations, supervision, control, time management and delegation
|
| Communications |
- will need to be reviewed and restructured
- employees may not understand your changing role and still expect to share their daily problems and triumphs with you
|
| Location of business |
- it may be necessary to consider relocating business premises
|
| Customer services |
- standards may suffer under growth pressures
|
| Delivery schedules |
- will be subjected to pressure
|
| Product quality |
|
| Established business activities |
- may be jeopardised through management neglect as attention is directed to areas and problems of expansion
|
More information
On this site
Planning your business growth provides more information about:
- the key issues for business growth
- tips for success
- the services available to help you.
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