Let me introduce you to Reef, a life-long surfer from the West Coast who opened up a surf shop on the beach to teach locals and vacationers to surf. He’s happy to share his recent business learnings with you today on sustaining business growth:
“Aw, dude! I logged a marathon session out the back waiting for the bomb, but when the set of the day finally swung wide, I took a heavy spill on the drop. We don’t want to do that in biz, man. Once you’re up, you gotta ride that beauty all the way to the sand.”
OK…some surfer slang translation may be needed. What Reef is trying to say is he waited all day in the water for the perfect wave to come, and when it did, he caught it but crashed. You don’t want to do this in business! Once the perfect wave of growth comes, you need to be able to stay in business and not go under.
Reef knows his business has mega-growth potential and diligently prepared for rapid growth before it happened so that his business didn’t experience avoidable growing pains that would have ultimately put him out of business. He also knows the importance of sustaining that growth all the way through the wave — not just at its peak.
Not being able to stand after catching the perfect wave of growth for your business can be devastating for your company. I’d love to be your financial surfing instructor, helping you prepare for the future waves of growth while also providing you with the financial stability to stay standing once you catch it. Schedule a meeting with me today to learn how to sustain your financial health before, during, and after rapid growth.
How can I prepare for rapid business growth before it happens?
Unfortunately, no one knows when the perfect wave is coming, on the water or in business. For example, Zoom could have never anticipated a global pandemic that forced millions of people to work from home. The spike in demand for video meetings was almost immediate — one day the world was business-as-usual, the next day almost everyone was working from home. For the most part, Zoom was ready for an influx of customers, but they had several hiccups while riding the wave of rapid growth. (Who remembers the early-pandemic era of prolific zoom bombing?)
In my article, Too Much of a Good Thing? How Rapid Growth Puts Companies Out of Business, I shared that there are many steps you can take before rapid growth happens to avoid reputation-tarnishing issues:
- Create scalable systems and processes now.
- Determine who you need to hire as you grow.
- Be wary of over-investment in infrastructure.
- Consider the growing pains of cash flow management.
- Don’t panic if your profitability is reduced during the first stages of rapid growth.
For more details and expert tips on each of these steps, jump to last month’s article.
Pro tip: I highly recommend the book Traction by Gino Wickman and his Entrepreneurial Operating System (EOS). His system is designed to strengthen your business’ people, vision, issues, data, and process. When all of these components are aligned and working well, you have traction. And that’s what you need to prepare for growth! If you’d like a referral for an EOS implementer, please send me a message.
Three ways to capitalize on growth opportunities now
Once you catch the growth wave, it’s time to enjoy the ride! But you can’t do that if you wipe out and go underwater. I recommend focusing on three priorities to keep yourself financially upright so you can not just capture growth, but sustain it.
- Focus on excellent customer service. If your customers feel good about your services or products, they’ll stick with you better than white sunscreen on a surfer’s nose. Mess it up, and they’ll hop on a competitor’s surfboard faster than if a shark were in the water. In other words, do everything you can to make problems right with customers as quickly as possible (or iron out those issues before you catch the wave). If you don’t, you’ll not only lose them as a customer, you’ll lose any referrals they may have otherwise provided. Hire a top-notch customer service representative, have solid processes and protocols in place, and make it easy for your customers to contact you when they need to.
- Diversify your revenue streams. Heavily depending on one service to generate all of your revenue is risky. What if something happens to disrupt your market share? Consider ways to diversify by offering more options related to your core business but which aren’t likely to be affected by similar potential market disruptions. For Reef, it didn’t take him long to realize that he was leaving money on the table by limiting his business to surfboarding. Without much more investment in overhead or inventory, he expanded his services to include paddleboarding sales, rentals, and instruction, sunscreen and sunglasses sales targeting non-surfing beach-goers, surfing photography, and wet suit rentals for when cooler weather hits. He was able to seamlessly train his current employees to offer these products and services, leveraging what he already had available for growth.
- Prepare for the end of the wave (AKA economic downturns). When cash is high and you have an influx of sales, you should do two things: 1) pay down your line of credit or ask for an increase of the line and 2) stash some away in an emergency fund. You won’t know if you’ll have a financial slump on the horizon until you know how well (or not) you handled those new customers or experience any other problem sharks in the water. It’s best to plan ahead, just in case, because you may need that extra cash to cover you while you wait around for the next perfect wave of growth to come along.
Pro tip: Sometimes a growth wave may come because of an economic situation, like a supply chain disruption. For example, if customers are worried about running out of your product or service, they may stock up before you run out…which means more sales now but less sales in the future. When things go back to normal, your sales will slump because your customers aren’t ready to buy again — they still have a stockpile! Manage your cash flow and save up money when you can so that when the slump comes, you aren’t knocked off your financial surfboard.
Sustain your business growth with a fractional CFO
Hiring a Fractional CFO, AKA financial surfing instructor, is the best way to confidently prepare for the waves of growth while also achieving financial stability so you can ride the wave without going under. Schedule a call with me today and let’s discuss your business growth goals and steps we can take together to ensure you can reach them while standing upright on your business surfboard.
