Growing pains of a business

So your company is now two to three years into the business. You have survived the challenges of starting up the business. Hooray!!


Next challenge: Growth phase. What are the common issues that a company needs to keep in check to secure financial sustainability?


Insufficient resources:

Cash: When a company has been operating as a bootstrap, the success story is seen from the positive cash flows and the company’s ability to start paying its founders. When the company is looking to grow, assuming it didn’t start out with a comfortable funding support, lack of capital will be a key limiting factor. The company will have to look into additional funding resources. There are various ways to raise the funds. In all circumstances, investors would want to see a compelling presentation of the viability of the company. Forecasted numbers by itself will not to tell much.


People: As much as a business owner may prefer to stay on as a soloprenuer and keep the organisation as lean and mean as can be (which is still possible for a growing business), relying on additional manpower support is inevitable. Management of human capital will need to be strengthened up at some point, and the best time to do this is two years into the business.


Other resources that could be beyond our control i.e. material supplies and other operational elements can be managed through strong contracting strategies and documents.


Undocumented workflow and processes

In the corporate environment where I was used to be, every workflow is documented and reviewed with revisions typically every year (or two, in a larger environment). This practice is highly and crucially recommended to businesses of all sizes. The right time for a new business to get its work processes well document is now when the business is newly up and running. I have seen where processes change when a new person takes over the job as in “this is my way of doing it”. Big risks involved when processes go undocumented e.g. errors, even fraud!


In today’s very fluid and highly technology driven environment, more frequent reviews should be made mandatory to ensure fool-proof  business processes. Processes that have not been changed and updated with best practices also fall in a trap of “This has always been the way we do things around here” and get into similar risks as undocumented ones.


There are simple ways to document these workflows without getting trapped into the rigid corporate style of documentation. Key things that need to be in the document: revision dates, start and end of the processes with the who, the what, the how and the why.


Relevance of the company’s business plans

So a company had a business plan when it first started, call it whatever means have you “Lean Canvas”, a business blueprint, a strategic plan, a business model, or simply put, a plan.


Two or three years into the business, if it goes unchecked, the probability of the business going off tangent from where it started to be is high.


A business plan should be both firm and fluid enough that is adaptable to changes in the market without losing its main goals. A complementing performance management process needs to be n place to keep the plans in checked.


My pain points during a business plan review are crystallising the business’s goals and targets. What appears to be a goal in a normal context, may not be a concrete target.We can put a number, but the question that needs to be answered is what value creation does an activity contribute to the company. Whichever templates that you picked to write your business plans, you need to adapt them and think of the value outcome from your business activities, so that six months and one year later you can review the progress of this value.


There are various factors that should be assessed to come up with a strong business plan: market environment, company’s strengths, company’s positioning. Focus on the positives and turn any weak points into strengths.


Risk assessment

It cringes me to think that even some large organisations may have some deficiencies in their risk assessment practices. Hence, occurrences of workplace accidents, thefts, frauds or simply unhappy workplaces.


Risk assessment need not have to be an elaborate exercise for a smaller organisation. As long as the business plan have been given the risk assurance, then it is fool-proof.


Ideally, a risk assessment exercise should be done every six months (or quarterly depending on the size of the business). This can be done together with the performance tracking process.


How would a stakeholder (I.e. an investor) be able to see that the above points have been addressed. One is through the business plan presentation, another complementing document should be the company’s year end reports.


Value of a company’s year end reports

A company’s year end reports shouldn’t just be the audited accounts. As an accountant myself, I find it meaningless. We can interpret numbers but that doesn’t tell us the complete picture of the company. The document should be well curated to tell a compelling story of the company’s performance. A well written year end report complements the business plan whic the company has set out at the beginning of the year.


I used to not enjoy reading the traditional annual reports published by listed companies. Financial analysts like me only get to the numbers and perform our analysis to assess the financial viability. Lately, we have started to see very well curated published annual reports. IIRC makes compilation of exemplary reporting here


Especially for smaller organisations where it is easier to put a story together, an annual report should be an interesting read for anyone who has an interest in it, be it a customer or an investor. I particularly like how ASOS Plc, the clothing company, published their annual reports on their website They are a young 16 year old company which have achieved tremendous continuous growth since their inception.


If you need help with the growing pains of your business, I would like to hear them and share my expertise. My passion is seeing small businesses grow.


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