A period of rapid growth can be both a blessing and a curse for your business. It can mean higher profits, employing more staff and a sustainable future. But, it can also mean you get overstretched, experience a huge change in company culture, hire the wrong people and face rapidly mounting costs. The good news is that, by setting aside time to plan your growth, you make it much more likely that your growth will pay off.
The UAE is primed for startup expansion and received an enormous 84% of the startup funding coming into the MENA region, according to research from MenaBytes. That said, a report from the Dubai government’s SME agency found that only 19% of the emirate’s small businesses have high scalability potential – in large part due to high overheads. If your business looks set to grow, planning now will make sure you reach that potential.
Let’s look at five ways you can plan to handle a period of fast growth.
Keep an eagle eye on cash flow
Cash flow is by far the most important marker of success for a business, and it’s critical during periods of rapid growth. To accommodate the extra demand for your product or service, you will have to spend more on staff, property, technology and so on. Investment is essential, yet if your outgoings are greater than your income, the business can go bankrupt fast.
Cash flow is by far the most important marker of success for a business, and it’s critical during periods of rapid growth.
How to manage cash flow when you’re growing fast
To manage cash flow during rapid growth, you should:
- Compare your actual cash situation against accounts receivable and accounts payable every day as well as conducting monthly reviews
- Ask clients to pay you faster
- Find strategies to deliver your product or service more efficiently
Key Performance Indicators (KPIs) tell you how well your business is doing, by providing you with a consistent way of monitoring your growth. During periods of rapid expansion, it’s hard to see the wood for the trees. With the amount of change going on, it can be difficult to assess how healthy your growth really is – KPIs help you do just this.
Which KPIs should your fast-growing business monitor?
You should conduct monthly reviews of the following KPIs:
- Customer Acquisition Cost (CAC) – how much do you have to spend in terms of marketing, sales and expenses to win new business?
- Customer Lifetime Value (CLV) – calculate the total net profit for each customer during their relationship with you
- Gross Profit Margin – find out how much cash you’re making after all expenses and tax
Evaluate and plan your business functions
When most businesses start out, the focus is on core functions. A tech company focuses principally on software development. A manufacturing firm concentrates on operations. An advertising agency will develop the creative side of its business. However, over time, these ‘fee-earning’ roles need to be expanded on if they are to function effectively. HR is an obvious example – while many business owners feel reluctant to spend money on this function at first, without it the company could suffer serious resource and culture problems which hold it back long-term.
How to plan business functions for growth
You will know your business best, but it’s wise to begin developing teams which can support your growth long-term. Do this by:
- Beefing up your core functions
- Remembering to keep a balance – it can be tempting to invest heavily in fee-earning departments such as Sales, yet this needs to be balanced with enough staff to actually produce what you’re selling
- Hire non-fee earning functions such as HR, IT and finance, or consider outsourcing
Find the right people
Finding the right staff for a growing company can be a huge challenge. You need staff with the right experience and skills, but who also fit your existing company culture, and can push it forward. A full 63% of business leaders in the UAE report having hired someone who just wasn’t the right fit – and that can result in high costs, reduced productivity and increased stress. Making poor hiring decisions at critical growth periods can really make the difference between succeeding and stalling.
Finding the right staff for a growing company can be a huge challenge.
Tips for finding the best staff during growth periods
Here’s how to find the right staff when growing fast:
- Consider outsourcing – recruitment agencies can be costly, yet by finding a partner to search for employees for you, you save hours posting ads, vetting CVs and interviewing candidates
- Consider hiring an HR team – many startup founders want to maintain control of the hiring process, yet the time it takes to hire means you lose focus on the bigger picture
- Consider using freelancers and temp workers – the internet has opened up opportunities for businesses seeking people with specific skills. Use websites to find freelancers with skills as diverse as website building and translation
Consider mentoring and professional networking platforms
Running a startup can be a lonely experience. However, you don’t have to go it solo – by learning from the experience of peers and mentors who know your sector, you can gain useful advice on how to grow your business. This can also give you an outside perspective on where your business could do better.
How to find mentoring and professional networking platforms
There are extensive resources available for finding mentoring and startup support networks across the UAE:
- Read our blog on finding a mentor in the UAE
- Join networking sites such as Startup Grind (here’s their Dubai chapter)
- Most free zones offer their own networking events – enquire about them from the authorities
Avoid the growing pains of startup expansion
If you’re growing fast, it means you’re doing something right. By taking the time to prepare and plan for growth, you make sure that this growth is sustainable and that you can keep delivering what your customers expect – all while expanding to new markets.
Setting up your own business has never been easier. Virtuzone takes care of it all so you can focus on what matters – building your business. For more information about company formation in the UAE mainland or free zones, please call us on +971 4 457 8200, send an email to firstname.lastname@example.org, or click here.