As a norm, businesses face growing pains all the time. However, without a plan to increase your business’s ‘pain threshold’, these temporary challenges can quickly become permanent problems.
Growth suggests maturity, increased revenue and profit, and new opportunities. However, growth brings along new risks and challenges, both from within the company and from external market forces. At the Singapore Chinese Chamber of Commerce and Industry’s annual forum in January this year, DBS Senior Economist, Irvin Seah, shared that it meant Singapore SMEs would have to expand into other ASEAN regional markets for opportunities.
To navigate these challenges, businesses need to carefully plan out their next steps and learn from those who have succeeded before them. Let us unpack the three things that successful and fast-growing businesses do to ensure sustainable and manageable growth.
1. Fast-growing businesses manage their finances
To make money, one must spend money. A growing business often needs extra cash to expand and keep up with the increasing demands of day-to-day operations. Companies may need to increase inventory, rent a bigger office, hire staff or buy equipment. If left unmonitored, these costs can quickly spiral out of control, putting cash flow under pressure.
One solution is through take-out financing – such as the SME Working Capital Loan – to cover immediate expenses. Initiated by Enterprise Singapore, the loan acts as an additional financing option by helping eligible companies cope with larger working capital and cash flow needs, granting up to $300,000 in funding over a five-year repayment term.
There is a need to keep a tight handle on spending. It may be tempting to splurge when there is more money coming into the business, but it is also a good time to cut costs to secure future cash flow.
Remember, financial institutions view fast-growing businesses as risky. Manage finances well and ensure that the company can honour its loan repayments. This will allow the company to be in good stead for further loans if more financial assistance is required.
Keep on top of cashflow with accounting technology that allows the company to send invoices throughout the month. Such technology automatically reminds customers that their invoices are overdue, monitors the company’s cashflow situation and gives a real-time overview of finances. The latter is crucial because it allows the company to react to problems as they arise, or better yet, to prevent them in the first place.
A company’s main financial goal should be to maximise its business value. Therefore, there is a need to look beyond organic growth and find strategic partners who can help the company achieve better operational efficiency, thus maximising gains in scale. This involves negotiating better payment terms and discounts with suppliers, leasing assets instead of buying, outsourcing, converting unused assets into cash and restructuring debt.
2. Fast-growing businesses manage their people and culture
People, culture and environment are closely connected and are key to overcoming growing pains. Building a culture that promotes engagement, collaboration and open communication motivates employees, thus positively impacting their productivity and creativity.
Effectively managing changes that come with growth is crucial because employees ultimately influence the success of a business. If teams are not supported or guided through the change, employees could feel pressured or overwhelmed, leading to potential internal friction that could impact customer service. Hence, it is crucial for companies to anticipate and plan for internal growth challenges.
Companies can do so by offering opportunities for skills development, providing adequate training in line with the business’ growth, thus giving team members the best tools for the job. A strong management team that is guided by strategic goals can in turn help identify high potential individuals and any gaps in skillsets.
Companies could also implement flexible working arrangements to help employees juggle their personal and work commitments. According to a Randstad Work monitor survey, 85% of workers in Singapore prefer agile working as it increases productivity, creativity and job satisfaction. If each employee is most productive at different hours of the day, there is little reason to restrict them to a 9-to-5 schedule that hinders their optimum efficiency.
Finally, if a company needs to hire more people to support its growth, hiring for a cultural fit should be prioritised over skills. Alignment with the company’s values and beliefs is imperative as those who do not fit in often cause poor performance and decreased job satisfaction in more employees.
3. Fast-growing businesses manage their processes and automate their business
One mistake that many small businesses make is failing to change their systems and processes as they grow. This results in inefficiency and wasted time, money and resources.
Every hour lost to completing menial tasks that can be automated, is a lost hour that can be spent nurturing potential business leads. Hence, it is important to invest in proper business management systems that can track all aspects of business operations. Instead of ordering and stockpiling, technology could be implemented to reduce inventory costs and keep track with timelines. This way, the business can be kept running at optimal capacity while customers are kept happy.
Businesses operate in an environment of constant change. Markets, people, competition, technology, laws and regulations are constantly in flux and a change in one aspect can impact everything else. A business’ goal should include sustainable growth supported by strong governance, aligned teams and a clear strategy that confirms the viability of the business model so as to lay the foundation for its development.
Arlene Wherrett | VP & Managing Director | Sage Asia
Arlene Wherrett is the Vice President & Managing Director for Sage Asia responsible for accelerating the growth of Sage’s business in Asia. Working closely with Sage’s loyal business partners, Arlene strives to build on the successful business that has been established in the region over the last two decades.
Arlene has over 20 years of experience managing businesses within the IT and Services industries across the Asia Pacific region. Prior to joining Sage in early 2017, she held the position of Managing Director, Australia, with the highly successful Salesforce implementation partner, Bluewolf, an IBM company.