How SMEs become stretched during scaling process

This is the fourth article in our series specifically about supporting small business and the challenges of scaling, Gilroy Gannon take a look at the issues around people and processes, how these can become stretched by scaling and what SME’s should be wary of when expanding.

People and Processes. 2 of the 3 additional 7 P’s of marketing were added to reflect the importance of these factors in the marketing mix and the increase in service business numbers.

When businesses begin to expand, personnel and the business processes can often become stretched and sometimes break which can endanger the business itself.

Businesses scaling too quickly is the largest reason for business fails so its crucial to have a solid vision, plan and system of monitoring and benchmarking.

Some of the key areas to closely monitor are;

Staffing Levels

Always a tricky balancing act when scaling, judging the correct staff numbers, skills mix and deriving value and growth from this increased capacity while still remaining true to the core vision and delivering value for customers is tough.Extra staff require extra resources in terms of revenue to pay them, time to orientate and train them in systems and culture and if you are adding a new section or function to the company then this requires a total shift across the company.

Failure to generate revenues from these new hires will cause cashflow difficulties in no time.

Cultural Focus Shift

Very often scaling too quickly or intensively can result in poorer focus on the very areas which saw the company achieve growth.
Staff are stretched and potentially more likely to cut corners, there is poorer focus on customers and less opportunity to plan and monitor.
This may lead to customer dissatisfaction and a decrease in spend per transactions and actual numbers of transactions as customers so it is critical to.

Cash Flow Difficulties

Premature growth will expose the existing systems to strain which as mentioned may cause cash flow difficulties which jeopardise the company. As we’ve seen customers need to be able to continue to identify with the companies core offering.

How often have you seen a business such as a restaurant expand only for the quality to dip and the inevitable reputational damage to occur?

Staff become disillusioned and disorientated, customers become confused and management spend time firefighting not planning?

It is important to keep a close watch on all the financial markers when scaling but link these to other bench marks and do so in a way that is realistic and clear to all staff members existing and new.

Assign roles and duties and adjust as required until the fit is right and revenues rise without affecting quality and goals.

At Gilroy Gannon we blend nearly 50 years of business and accounting experience with the most up to date accounting practices to provide our clients with the best outcomes and concise relevant advice.

We understand how to grow and develop businesses and our specialist our specialist Audit, Accounting, Tax and Corporate Finance teams work with clients to deliver sustainable growth and strong foundations for businesses.

Make Business Better with advice, support and services from Gilroy Gannon
Call us on +353 71 91 61747 or visit our offices at 25 Stephen Street Sligo

Posted in Small Business, Start up, Startup Business, Tips and tagged .