Most of us strive for more. To have more money, more status, more leisure time, more holidays (maybe just more coffee and chocolate). Similarly, most businesses strive for growth.
Business Growth could be defined as the process of increasing a business's size, which is reflective of it's profits, number of employees or market share.
Or a perhaps better worded question might be...
We can grow our sales and sell more of our product or service to more customers, making us bigger, and more well known. Then a bigger workforce is required to deliver those increased sales, reinforcing that the business has grown.
However, in the instance that a business go viral on social media, it is assumed the sales would then rise with the increased brand awareness. What if the reason your business went viral was for the wrong type of reason, like inappropriate jokes and slander that could harm your reputation?
Which of the following is the bigger business?
We are measuring growth by turnover or number of employees, as those are tangible and easy to measure. Thus, the answer would be A.
But which of those businesses is the most profitable? Which business will generate the most cash over the next 10 years?
Perhaps, we should all focus on sustainable growth. Growth not only in profits and cash, but also growth in loyalty and reputation. To survive against new competition and economic uncertainties, and to retain employees and customer base, a business may need to do a lot more than just chase new sales, but also keep what they have and nurture it.
If your business is rapidly growing, and the panic is settling in, doing your Management Accounts properly can help you. Be mindful if you ever cross an annual turnover of £85,000 or more, because you must register for VAT with HM Revenue and Customs (HMRC).
Additionally, it is good practice for all businesses to have a Cashflow Forecast, to avoid sudden payments, and know where to put your money. Read more about why businesses need one, and what the process is here.
If you are in any doubt, and have any questions on managing the accounts of your business during a spike in business growth, we'll put the kettle on and you can book a free-of-charge consultation with us.
