How to manage business growth
David Kigongo works on furniture at his workshop. He owns a wood work company worth more than Shs200 million. Photo BY Dominic Bukenya.
What you need to know:
Often attractive opportunities present themselves, but without discipline and a clear plan you are bound to miss them.
Growth is the bull’s eye that every person aims at when starting a business. But ironically, majority of businesses become victims of growth, especially if it is rapid.
Often companies start off well, with good products and establish solid reputations — enough to get supplies on credit and loans from financial institutions to support growth.
As the businesses grow and establish goodwill, sometimes something goes wrong and some start facing financial problems. Some strain to honour their obligations to suppliers and financiers and start receiving threats and demand notes. Sometimes debt collectors start calling in.
Growth, if not well managed, can put a good business in a bad financial situation where no supplier or banker would entrust it with credit. Experts on small businesses agree that managing growth can make or break a business.
When a business grows rapidly, it inevitably operates on limited resources. One such resource is finance. But what is trickier than limited finances is lack of financial management skills. In a situation where a business owner does not have financial training, it becomes hard to measure growth requirements and some input is bound to go to waste.
Dependable staff
Loyal and dependable staff, who were instrumental in setting up the venture, may not have skills and experience necessary to manage more complex challenges that come with success and growth.
The best solution to the challenge of managing finances when a business grows is hiring an accountant. Hiring a qualified accountant may be expensive, but the cost of not hiring one is even higher. The cost can kill your dream of running a successful business.
Juggling with financial issues, when you are unqualified, is like trying to solve a simultaneous math’s equation when you don’t know the formula.
Involving someone who knows about finances often helps one see the bigger picture. Sometimes business owners make decisions based on intuition because they don’t have adequate information about what is, and isn’t, working.
For example, if you are dealing with many products for different markets you need information on which product or market segment gives you profit and how much.
You need to know which advertisements work for you and which do not. You also need to know which employees deliver better so as to remunerate them accordingly and take appropriate decisions and avoid keeping demotivated workers and joy riders on your team.
Information helps you to prioritise your marketing efforts, and financing to avoid sinking borrowed money into a white elephant venture.
Mr Kiunga is the author of ‘The Art of Entrepreneurship: Strategies to Succeed in a Competitive Market.’
