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November 15, 2016 0

Most business owners are keen for their business to expand. However, knowing how and when to grow the company at the right pace is essential. Rapid, uncontrolled expansion can have a detrimental effect on a company.

So why is growing too fast a hazard to your business?

Well, there are a number of reasons…

Cash flow problems

Cash flow is at the root of many failed businesses. One cause of cash flow problems is when a company expands too rapidly. A growing business often equates to growing business costs which can quickly exceed the money that is coming into the business. It can be tricky to get the balance just right and businesses can fall foul of the fickle ebb and flow of cash in their business. Small businesses or start-ups normally do not have the same financial safety net to see them through this period which larger businesses normally have. This can cause real problems for the company’s directors.

A stretched workforce

Employees take on the burden of a growing business. As the business owner, if you don’t have time to adjust the size of your workforce to meet the increased demand, you can find yourself with a severely stretched workforce. This can lead to a decline in the quality of work the company produces, as well as having some overworked and unhappy employees. This is a terrible combination for a business.

Getting the new resources takes time and money

Controlling your company’s expansion means that you need to have the time and money to source and purchase additional resources to deal with the increased demands e.g. new employees, desks and computers. Arranging all of these takes time and money – neither of which may be readily available for the company at this time.

How can you deal with financial problems caused by your business growing too fast?

As soon as you are aware of your cashflow problems, you should seek professional help from your Accountant – or from a Licensed Insolvency Practitioner. The sooner you do this, the better.

Most good professional firms will offer you free initial advice. (We do – just call us on 0161 907 4044.)

Clarke Bell have a wealth of experiencing in helping company directors who have experienced one or all of the issues mentioned above.

Some directors just need general advice, whilst others have got so over-stretched that they are no longer able to pay their bills – i.e. they are insolvent, so need to address the situation immediately.

We can help you and your business if rapid expansion plans have not gone as you had intended.

You will get help on how best to deal with your company’s current situation, as well as advice on how to re-start your business – including introducing you to companies who can provide new funding for you.

For your free advice, call 0161 907 4044 or email [email protected]

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