Structure and plan for growth from the startOrmsby Street works exclusively with small businesses, so I have regular contact with SMEs all over the UK and Europe. One thing that often strikes me is how so few of these businesses seem to have planned and prepared for future growth.While many of them talk about expansion, there is not always the structure in place to do so easily. This is important for many reasons. Investors for example, would only be interested in a business that can scale, but also businesses that have thought about scaling can react better to new opportunities and to unexpected downturns. If a business has been progressing steadily, selling 1,000 widgets a month, but suddenly has to deliver 10,000 widgets a month, on time and on budget, then that is a potential problem. If the plans are in place to scale upwards quickly and effectively, then it is a problem that can be resolved. On the other hand, if the owner is suddenly desperately hunting for materials and plugging holes in the inefficient supply chain, then completing the order could become a herculean task.?
StaffingAn integral part of forward planning is of course ensuring that a business has the right staff structures to cope with a major new contract. Staff structures might sound like an odd place to start, but it?s something that I certainly didn?t do very well in the first business that I founded. As a founder, and when hiring employees number two, three etc. there is no alternative but to have people ?covering several bases? at once. Perhaps your designer does marketing, or your project manager does the finances, for example. As you grow, hiring people with multiple skillsets is incredibly difficult, and quickly becomes unnecessary as your scale reaches the point where there?s enough ?project management? or ?finance? for a whole person to be dedicated to doing it. Good staff planning means you have a clear idea from the start of how you will grow each function in the team, from where it is today to where it would need to be to double or times ten your capacity, and you can do it all with ?off the peg? job descriptions which are easy to hire. That means that whether it?s a temporary contract hire or a full time permanent team member, you?ll be able to hire quickly and well.
Don?t let late payment derail your businessFor any small or micro business, cash flow is incredible important. It allows the bills and wages to be paid and allows the business to survive during the sticky periods and makes business growth a more straight forward challenge. But good cash flow is almost entirely dependent on invoices being paid on time. So when a small business wins that big contract, prompt payment is arguably the most important consideration. If it will cost an additional ?10,000 in outlay to deliver the products or services to the new customer, what are the repercussions if an invoice of say ?20,000, is paid 30, 60 or even 90 days late? For many small businesses, such a scenario wouldn?t bear thinking about. So, to protect against late payment with a big new contract, small business owners need to understand exactly who they are working with ? a familiar brand is no guarantee of prompt payment. small business owners should check the financial health of every supplier, partner and customer that they work with, learning their credit rating and payment history. If it emerges that a company has a history of late payment, then the owner can negotiate different payment terms or even walk away from the deal if they feel it would place their business under unnecessary risk. Winning a big customer is something to be celebrated. Planning for such an eventuality and protecting itself against any potential problems is a sign that a small business is ready for the next stage in its growth. Martin Campbell is MD and co-founder of Ormsby Street, the company behind digital cash flow tool ?CreditHQ. Small business minister Margot James recently reaffirmed the government’s commitment to combat late payments
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