Money
Issue No. 41 - June/July 2008
How to manage rapid growth
by Chris Gebhardt
Small to medium sized enterprises (SMEs) in a rapid growth phase face many challenges that can have serious consequences if not managed carefully – while steady growth is positive, unbridled growth can be fatal.
Director of Business Advisory at William Buck, Chris Gebhardt, says the businesses that handle rapid growth best are those that have good business practices
in place.
“A business plan will provide clear direction, a practical method for planning and potentially add credibility to your industry position,” Chris says.
“A business plan should be developed in concert with stakeholders, employees and advisors. This inclusive approach is likely to result in greater ownership of the goals and outcomes.
“Typically it should cover a three to five-year timeframe, addressing key issues such as structure, culture and values, SWOT analysis, goals and objectives (short and long term), business model employed to achieve goals, marketing strategy, financial objectives and risk management.
“It’s vital to understand the business model which has been employed within the business plan.
“The business model is effectively a summation of the core business decisions you employ to earn a profit. These decisions include revenue sources, expenditures, investment size and critical success factors.”
Chris says a good process of evaluation to follow is:
1.Evaluate sources of revenue and timing of
cash inflows.
2.Establish costs drivers, and timing of cash outflows.
3.Determine investment required to make model work, and funding of this investment.
4.Identify critical success factors such as supply chain contracts, key staff appointments, marketing/branding strategy
5.Timing of profitability
6.Timing for positive cashflows
“Evaluating a business model is a continuous, evolving process,” Chris says.
“Evaluation should be a highly detailed task, seeking input f...
