Growing Your Business

Six Reasons Your Small Business Growth Never Works Out the Way You Plan  

Six Reasons Your Small Business Growth Never Works Out the Way You Plan  

You're reclining at your desk with your head buried in your hands. Lately, every day feels like a Monday. You never imagined you would encounter so many pitfalls while trying to grow your small business. If you can relate to this scenario, you're likely realizing the importance of planning in the business arena. You may also relate to the following six reasons that your small business growth isn't working out the way you expected it to.

1) You Don't Know When to Raise Outside Capital

Without a comprehensive plan, a small business owner might struggle mightily to determine the right time to raise outside capital. If you're unsure whether now is the time to seek outside funding, gathering pertinent information about the economics of your company is crucial. You need to collect data, justifying both a need for money and the right amount of funds to ask potential investors for. Do you need cash to build an addition onto your business property? Secure bids and determine how much the expansion will cost. At the end of this fundraising planning process, you might possess a road map to present to investors. You can use this road map to explain why you need their money and what results they can expect. Or, your plan may convince you to abandon raising outside capital for the near future.

2) Your Growth Is Outpacing Your Cash Flow

Becoming overly excited and confident about growing sales isn't hard to do. However, for a small business owner, cash is more important than revenue. Your credit sales might be skyrocketing. However, collecting cash from customers in a timely manner may be problematic. In the meantime, you may wonder how you're going to pay your business property's electric bill.

3) A Founder Wants Out

Imagine you started a small business with your best friend from high school. After working together for two years, you and your buddy get into a fight. He or she wants out of the business. In these unpleasant situations, having an ironclad buy-sell agreement is crucial. By signing a buy-sell agreement, you shouldn't encounter any devastating surprises if, and when, a founder leaves the company. Another viable option is to incorporate your business early. Issue shares of stock to all of the founders.

4) Your Original Team Lacks Required Skill Sets

The team you launched your small business with might not need to be the team you continue to grow with indefinitely. Growth brings stress. It also often highlights a need for skill sets some members of your team don't possess. Keeping a poor-performing worker can drastically increase costs. So, you should be prepared to fire employees who can't help you sustain long-term business growth.

5) You're Making All of the Decisions

If you built your small business from the ground up, you might prefer a root canal than delegate decisions to others. However, you might not always make the best decision or the fastest one. To enjoy successful, long-term growth, concentrate on hiring decision-makers rather than helpers.

6) You Need to Revisit Your Strategy

Unfortunately, even good plans sometimes need to be revised. Recessions happen. New competitors emerge. Consumer tastes change. An unwillingness to revisit your strategy can severely stunt your company's growth. Be flexible. Review your strategy monthly in order to ascertain if you need to make changes to it.

Growing a small business can be one of the most exciting, challenging and stressful events of your life. To accomplish lasting business growth, smart planning is essential. To help you plan for your company's financial future, consider working with a professional accountant.

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Sherri Hastings

Sherri Hastings

Tim Murphy is the managing member at Murphy & Murphy, CPA, LLC, a full-service certified public accounting firm, with emphasis on tax preparation, audits of governmental, educational, and non-profit entities, retirement planning, estate planning, business valuations, litigation support, and banking. He is a Certified Public Accountant in Maryland and Virginia. Tim is also a CERTIFIED FINANCIAL PLANNER professional, Personal Financial Specialist, Accredited Estate Planner, Certified Valuation Analyst, and Investment Adviser Representative.

MURPHY & MURPHY, CPA, LLC.
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