The hidden danger of growing your firm
January 21, 2021
By Liza Robbins.
One of my friends founded a company that was successful beyond her wildest dreams.
It grew fast, and she loved capturing new business and dealing with the clients.
But then, her contact at her biggest client died, and their replacement brought in their own people.
Through no fault of her own, she lost this key contract.
Within a few short months, she was forced to sell her company.
It turned out that she had been so busy with the “fun” parts of growth that she hadn’t taken time for more hum-drum matters like risk management. Even as her business grew, she had been dangerously exposed.
I’ve been thinking of her story a lot recently…
You see, ever since COVID started, there has been an enormous focus on businesses that are struggling. It’s only natural as the world has plunged into economic crisis.
But here at Kreston, we’re also seeing a lot of growth.
I regularly talk to firms that are busier than they’ve ever been… That have had to hire heavily to handle all the extra work… That are taking on new clients regularly.
It’s a fortunate place to be in right now.
And if your firm is lucky enough to be in that position, you’re probably excited about the opportunities and feeling energised.
You’re likely also feeling very confident, given that you’ve thrived during the biggest global challenge of our lifetimes, the pandemic.
But you cannot be complacent.
It goes against all our instincts, but fast growth can be dangerous.
As my friend saw, it’s easy to get so caught up in a whirlwind of activity as your firm grows that you can lose sight of the bigger picture. You can end up neglecting essential parts of the business, like strategy, oversight and developing a balanced portfolio.
If your firm doesn’t develop its processes fast enough, you might not be able to handle an influx of new work smoothly.
The systems that could easily cope with 100 clients might buckle with 150… Your services can become disorganised and inefficient, and you’ll end up with an unhappy client base – and some very stressed team members.
When you scale too quickly, you can also end up making big mistakes under pressure – like hiring the wrong people or investing in the wrong technology. These can cost you dear in the long-run.
Finally, you’ve probably dealt with clients who ended up in financial trouble, precisely because they were growing. While their numbers looked good on paper, they had to invest heavily to sustain their growth, and ended up with cash flow problems.
If you’re expanding quickly, you’re not immune to that either!
The bottom line is that fast growth needs to be carefully managed.
You need to make sure that you have the right infrastructure, people and processes in place to handle rapid change.
But it all begins with awareness…
…And understanding that what seems like the best of times can rapidly become the worst of times, without due care.