Rapid business growth might be the dream of many business leaders, but the reality of unexpected growth can bring many new challenges. Companies that don’t have a clear strategy to manage rapid growth can struggle to find the capital, people and resources they need to meet customer demand and continue to thrive.
In this article, we’ll explore the pros and cons of rapid business growth and explain six ways to manage it.
The importance of managing rapid business growth
"There is a fine line between rapid business growth that is healthy and growth that could be potentially harmful," says Haydn Bratt, author of the M-Powered Business, 2023, and a high-performance leadership coach at Mindset Leadership. “The line between rapid and potentially damaging growth lies in the ability of the business to effectively resource that growth,” he says. “The more skilled and people-centric your business is, the greater the risk that rapid business growth could be destructive.”
Your approach to rapid business growth will also depend on your goals, Bratt adds. If your intention is to grow and sell a business quickly, then rapid growth with a low-cost base can be an attractive strategy. “However, if you want the business to operate for the foreseeable future," he says, "then you need a solid structure to support long-term, sustainable growth.”
How to manage rapid business growth
If your business is experiencing rapid growth, then there are a number of potential tactics that can be adopted:
- Adjust marketing activity.
- Prioritise existing customers.
- Make provisions for capital well in advance.
- Prioritise recruitment.
- Hold regular strategy meetings with key stakeholders.
- Create robust supply agreements with key material suppliers.
1. Adjust marketing activity
Reducing your marketing spend when it’s working well for your business might seem unthinkable, but the inability to meet high demand can cause a series of even more challenging problems for a growing business.
Keeping a close eye on your marketing activity can help to slow down demand during a period of rapid business growth. “I’d encourage SMEs to look at marketing activity and turn off marketing spend depending on their ability to serve current clients,” says Bratt.
“However, leadership should be planning marketing activity six months in advance, because if you turn off marketing and leave it too long, you might find the pipeline dries up. Thinking ahead is critical.”
2. Prioritise existing customers
UK-based parcel courier Packfleet realised that taking on more business in the run-up to Christmas would lead to lower service levels for existing customers. “We saw a huge spike caused by online shopping, but taking on all that business would create a mess, and customers might not even get deliveries,” says Tristan Thomas, CEO of Packfleet. “For operational reasons, during the holidays, we stopped accepting new customers.”
3. Make provisions for capital well in advance
Another significant risk associated with rapid business growth is a shortage of capital. Younger and smaller companies are more likely to have less access to capital, and fewer people to take on an increased workload, says Bratt.
Companies should use forecasting to identify potential periods of rapid growth at least six months ahead so there is time to make provisions for capital in good time. “Ideally you want to be ahead of the curve and secure finance in a form that does not incur costs immediately, and which can be accessed as and when needed,” he says.
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Packfleet raised capital from venture capital very early in its growth, says Thomas. “We knew we wanted to be a high-growth business and having that capital upfront meant we could invest in things like vehicles, warehouse space and people when we needed to. Without that capital, we’d be much more constrained.”
4. Prioritise recruitment
Rapid business growth will probably mean you need more people to handle an increased workload. At Packfleet, rapid growth saw office staff increase from five to 30 in just over a year, while the company increased the number of drivers from six to 60 in the same period.
While it’s tempting to say you’re too busy to interview and recruit new people, this will only result in poor service for customers, says Thomas. Similarly, it’s important to get the right people involved in hiring, he says. “It’s tempting to cut corners and set the bar lower because you are desperate to get people through the door. But finding and recruiting the right people is probably our most important challenge.”
Consider building relationships with specialist recruiters who have candidates ready to place, adds Bratt. “This can help overcome short-term resource challenges and means you can access a healthy freelance population if needed,” he says.
5. Hold regular strategy meetings
The leadership team should be meeting regularly to review business forecasts, identify potential pinch points and understand critical factors that could limit your ability to serve the market. “Always be looking forward by a minimum of six months to understand what areas of your business would be under pressure in a period of rapid growth,” says Bratt. “What actions can you put in place now to ensure you can deal with those problems if they arise?”
Bratt recommended using these meetings to build continuity plans for ‘just in case’ scenarios. “For example, how could you build capacity or access to resources without significantly increasing cost?” he says. “This should be a key component of your thinking.”
6. Create robust supply agreements with key material suppliers
Your business could be well-positioned to handle rapid growth, with the right capital, people and capacity. But what happens if you can’t get hold of the right raw materials or supplies for your business?
“Creating robust agreements with key suppliers is a move that businesses can make in advance of rapid business growth and any potential challenges,” says Bratt. For example, you might agree priority status with key suppliers that guarantee your orders will be met within a certain timeframe, or you might negotiate pricing discounts for higher volume orders.
Which strategy is best for your business?
Again, rapid business growth is the dream scenario for many businesses, but without careful planning and growth management tactics, it can soon become overwhelming.
The best strategy for managing rapid business growth is one that is specifically tailored to your type of business, says Bratt. In particular, it depends on the type of business you operate, your long-term goals and whether you're planning to eventually sell the business.
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