One of the hardest decisions to make when it comes to scaling your business is the seemingly straightforward question of when to do it. The obvious answer to that question seems to be you scale when you have to, when you are ‘forced’ to by the market. But there is more to it than that. 

The decision seems to be all the more difficult when you are striving to be an ethical business too. When you want to work in a certain way and to a certain standard, you will feel some of the more rough and ready mechanisms like short term financing, or invoice factoring, aren’t available to you. 

Managing Risk And Your Business Growth

One of the main issues when it comes to scaling your business is the element of risk. And that's especially poignant when scaling your business growth in a responsible way. Whether that means taking into consideration your team and the way you want to work, or the environment, or whatever factors and values are important to you and your business. 

That element of risk, especially if those risks come home to roost, can cause all sorts of friction pre scale and especially in a growing business.

For instance, you need staff to scale up. So you recruit the ideal team before you get where you need to get to in terms of turnover. If you build it, they will come right? Something has to be the catalyst for the growth, and gearing up so you can deal with the increased demand you are planning for seems a sensible idea. 

But what if there are delays? Internal or external? And you’d be guessing correctly when you guess there probably will be! If an order doesn't arrive when you expected it too, or a payment goes beyond your credit terms, its causes real pain. And now, since you've started to scale the business, that pain is very sharp indeed. 

So how do you plan for scale and do so in a responsible manner? One that will allow you to sidestep some of the more obviously issues around cash flow and supplier relationships that can become the first casualties in an unsuccessful growth spurt.  

Saving For A Rainy Day

The simple answer to this, and actually many other issues in your business is to create a war chest, or a ‘rainy day’ account where you can store capital ready for those problems you know are waiting just around the corner. 

If you were able to accrue, say, three months of operating expenses before embarking on a growth activity like a capital spend, or a recruitment plan, then the unforeseen issues you hit just don't have the same impact. 

And as well as helping you smooth out those peaks and troughs, the war chest actually provides you with the ability to resist short term and counter cultural fixes that would undermine your business values. Actions that many businesses are forced into, even though that are the absolute antithesis of everything that they stand for. The are forced into because they are over extended, and suddenly doing the right thing is a luxury they might not have any more. 

The Question Is How? 

But how do you plan for a three month war chest without [raising capital]? Well, one way is to talk to an experienced CFO and get the vital guidance around your finances that will allow for the head room to achieve this. 

In simple terms, you must identify what the risks are, and what the mitigating factors are. And bearing in mind mitigating factors are usually having money in the vault for the ‘rainy day’, then what we are really looking at is a disciplined cash flow management approach that allows your business to breath, and prepare for scale at the same time. 

As an entrepreneur, you might lack the experience or insight to do this yourself. Which is why consulting with an experienced CFO is worth its weight in gold. A CFO has the skills necessary to advise on the essential expenses that must be maintained in order to get yourself in a position to grow, but also the techniques you will find vital in terms of building the cushion we are talking about here, prior to scaling your business growth.

Talk To CFO On Speed Dial 

That can make all the difference when that unforeseen bump in the road appears. You’d be amazed how smoothly the transition from small to medium and medium to large business is, when you approach it in a reasoned manner that takes into account the facts. 

The facts are Murphy’s Law applies, and anything that can go wrong, probably will! But the responsible business owner has that covered before even embarking on the business scaling initiative that will take them where they need to be. 

And the experience and insight, as well as technical ability a seasoned CFO can bring your business is worth its weight in gold. Which is why they are so expensive! Nothing worthwhile is ever cheap. 

So, having a CFO on Speed Dial when scaling your business growth could be all the difference you need to make sure your activity is going to be successful, and at a fraction of the cost of employing a big hitting executive too.