3 Important Areas of Business Growth That Occur Over Time
Overview: Common ways businesses develop over the years, and how your company compares
Both for-profit and nonprofit companies develop over the years in ways they likely didn’t anticipate in the beginning stages. This is normal – but it could also be challenging. What are some common business development areas that many businesses experience, and how can you plan for growth? Let’s consider the answer.
Common Business Growth #1: Scaling
All businesses – no matter their initial and current size – should be aware of leadership, processes, and accounting scaling. Many businesses will start off simplistic in the beginning (limited team members and resources). This is understandable, as it wouldn’t be logical to run a small company and spend 50 percent of the resources on areas such as leadership, accounting systems, and coaches. Likewise, it would be just as foolish to run a large company after several years of growth on the same leadership, processes, and accounting systems. All businesses must scale with the growth of the company.
Scaling leadership appropriately:
Leadership will likely start off with a sole member: the person with the vision and passion for the company’s purposes. But success will easily grow that one-person team into a small team of members.
To maintain that initial passion and drive alongside growth, it’ll become necessary for the founder to develop a leadership team of two or three other individuals. (If this isn’t done, the business is creating a recipe for disaster.)
Not developing a leadership team alongside the company’s growth – or keeping it too small in comparison to business growth – will likely result in stunted business growth, limited ideas and, most importantly, limited “buy in” from team; growing the leadership team will ensure there is “buy in” from all in the company.
Common Business Growth #2: Processes
Similar to the leadership team, a business’s processes will need to grow alongside the team. It might initially be a “wing it” process as the company starts out. You likely just “figure things out” as you go, since smaller business means more time to, well, figure things out. However, this shouldn’t be made a habit, or the normal standard.
Transition from ‘just winging it’ to proven methods:
Processes should develop as problems arise even for small businesses. The founder could see a problem and change the process on the spot with little to no team input. But as the leadership team develops and the company grows, these processes have to be documented and refined. Say bye-bye to the “wing it” style and hello to a thought out, proven process. This should be a goal of the leadership team to document and prove these processes.
Common Business Growth #3: Financial Management
Finally (and most often forgotten) is the accounting for the company. This likely started with a check board, spreadsheet, and maybe a version of Quicken. But if accounting does not grow in sophistication with the company and leadership, it will quickly become the point of many problems.
>> Related Article: Helpful Tools and 7 Professional Tips to Track Company Spending
Most growing companies tend to shift from in-house accounting to outsourced as they grow, starting with payroll and then general accounting overall. If growth continues, it will become advantageous to move the accounting back in-house as the company has the resources to afford an in-house accounting staff.
Of course, you could choose an accounting software that fits your business needs. Having a dedicated accounting team can help lighten your load – from strategic planning to your basic payroll processing – so your schedule is freed up to focus on your core responsibilities (not accounting or financing).
You can contact our accounting firm for more information, or learn more tips on how to choose the right accounting firm as your partner.
Chad Porter, CPA, CFE, CEO
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