Growth is good. Up to a point.
Yes, sales are up. Profits may even be up. But,
cash flow can be disastrous. After all, if your gross margin is 50%, and
you are growing at 30% a month, you will run out of cash in 7 months.
Don't believe it? Consider this scenario.
You see, you don't get paid when you ship product.
Customers pay in 50 days or so. In the meantime, you need your cash to buy
your goods to make your sales, that are most profitable. (Notice, this
scenario assumes you have NO other expenses besides cost of goods- and you know
that's not right. But, with high growth, you will run out of cash.
Potential solutions: Offer
customers discounts for prompt payment (to get cash in quicker). Borrow
money. Raise capital. Slow down growth. Factor your receivables.
Issue 2: Personnel
As you grow, your will need more people to help produce,
ship, market, etc. This can become a full-time job, in and of
itself. Your executives may not be up to the task of managing this growing
enterprise. Or, maybe they can manage it, but they don't have enough time
to keep the mission in focus.
Potential Solutions: Bring in trainers
to train folks to do their jobs faster and better. Bring in a temporary
CFO, COO, or CEO, to train your existing people and pick up the slack, given the
Issue 3: Logistics
Now that you are growing, where will you be keeping your raw
materials, your finished goods, your semi-finished product. how are you
getting these goods to your customers? (Do you have enough trucks?
Is your shipping area big enough to handle this larger volume?)
Potential Solutions: Bring in a
logistics expert. Acquire more trucks. Stagger hours, so that you
can have two or three shifts working your shipping area.