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Is your business growing too fast?

How to tell if things are getting out of control

Sales or service orders are coming in thick and fast. The phones are constantly busy and the workforce is working flat-out. It sounds like a dream come true for any enterprise. But there are dangers involved in a too rapid rate of growth.

A growing business demands a constant flow of funds to meet orders, well-trained and professional staff and adequate facilities to keep up. Not keeping up can threaten long-term survival. Here are some of the signs to watch out for that can indicate your business is growing too fast from business banking experts, Allied Irish Bank (GB)

1. You are borrowing to keep up A fast-growing business needs a fast turnover of cash. There is a real danger that your outgoings won’t be matched by the business’s actual cashflow. Finding that your cash is being burned up to meet an ever-increasing demand before sales are realised is a sure sign that your business is growing too fast. What happens if an unforeseen cost should occur?

2. Profit margins are tight Are your profit margins too small? Tight profit margins demand that you run a very tight ship. With low profit margins even a small error, an unforeseen expense or the underestimation of an expense, can rob your business of its profitability.

3. Staff are over-stretched Hiring staff is a costly and time-consuming process. If you find that you are spending more and more time hiring and training staff and less and less on business management, it is a sign that control is slipping.

4. You are spending a lot of time doing other people’s jobs for them As the pressure builds, you have less and less time to keep as tight a control on the management structure and delegation of responsibilities as you would like. The result is a breakdown in team structure.

5. Productivity is falling A sure sign of low staff morale. Employees need to feel that someone is in control and to be a part of a team with set goals and rewards.

6. Complaints from customers are rising Every business receives complaints. A well-controlled business can manage these complaints, learn from them and use them to tighten operations. A business that is growing too fast is likely to fail to respond with the same effectiveness and run into problems with customer confidence.

7. You have received complaints about safety/environmental issues Excuses that you were too busy won’t hold water in court, with your insurers or with professional or regulatory bodies.

8. You’re losing touch with the world outside the business Keeping up with your competitors, your customer’s changing buying patterns, the latest technology in your field and best practices are all essential for future growth and survival.

9. You dread going into work If your business is becoming a daily crisis-management ordeal there’s something wrong. Planning every aspect of your business (especially cashflow projections) is essential for your future. A fast-growing business needs more, not less, time and effort expended in forward planning.

10. Your accountant is worried While it’s part of an accountant’s job to be worried, it is important to heed advice and to seek it often.

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