By Robert Guild
Owners and managers of growing, successful companies can learn from companies who have expanded too quickly. Each industry and company needs business growth strategies designed specifically for their conditions and circumstances.
It's a problem every business owner would like; having too many customers and projects. The reality is that companies can actually grow themselves into trouble.
A company can have a glut of demand, and if they aren't able to service that demand then obtaining new business and retaining existing business becomes difficult. Not having the proper business infrastructure to manage additional operational and financial responsibilities can lead to a company's inability to service growing demand.
When organizations grow too fast, they may become bloated with too many marginally productive people. They may also have key employees spending too much time putting out fires from the new business.
I have seen firsthand how uncontrolled growth can doom a company. I was once hired as a controller of a booming oil exploration business to help get the accounting department in order. The owners had become successful deal makers and were signing exploration projects faster than their legal or accounting departments could keep up with.
The person responsible for negotiating mineral leases and managing the drilling operations was doing a good job of lining up contractors to drill oil wells. Unfortunately, effective business growth strategies for both divisions were not in place. It soon became apparent that the infrastructure was not capable of taking on the additional workload. Not long after, management realized that they would not be able to service all their responsibilities and were forced to curtail new business.
Big companies run the risk of having overlooked inefficiencies. After working with the oil exploration firm, I went to work at a much larger company with the same history of salesmen overpromising on their organization’s capabilities.
They were a public company with more than 20 limited exploration partnerships, two pipelines, a gas processing plant, and two exploration and production companies. As I would soon find out, the accounting department was a mess even though the company had more than 30 accountants, an expensive data processing department, and customized accounting software.
It turns out that the customized accounting software was not symbiotic with the needs of the business. One of my first actions was to identify a commercial accounting software that would increase productivity and improve the accuracy of information.
The one I ended up implementing was developed by a company with operations very similar to our own, but on a much larger scale. The application ran on a cheaper platform that did not require an IT support staff. Within 18 months, we were able to cut costs by reducing inefficient accounting staff members from a count of 33 to 10. Additionally, the new accounting system provided more accurate information, with little effort on our part, that helped management make better decisions.
I often point to this story because it reveals how important it is to establish business growth strategies before your company gets so big that things start getting overlooked. As the company grew, there was no system in place that reviewed if the accounting department was operating efficiently.
Prepare For Growth
I have seen businesses waste both time and money due to not planning for future growth. Don’t run out ahead of your organizational capabilities just because the business is there.
Plan ahead by creating business growth strategies that account for how your business will handle new customers and projects. Provide staff with the system and resources they need to do their jobs effectively. Failing to do so can be disastrous. The candle that burns twice as bright burns half as long.
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