The business lifecycle: Growth
How do you cope with rapid growth and the changes that come with it?
A business undergoing rapid growth will always face strains on its working capital. Cashflow management is therefore key, and realistic budgets and forecasts must be in place.
The business model which worked well in the initial stages of the business may subsequently need updating, particularly as structures and reporting lines will need to be put in place for the increased workforce.
Internal and external relationships
Employee recruitment may prove challenging, particularly with concerns over labour flows post-Brexit in certain sectors. It will also be vital to ensure all key employees are a good cultural fit. Putting in place tax efficient reward packages to retain key staff both in the short and long-term is something we would always recommend.
As the business grows, key stakeholder relationships such as customers, employees, suppliers and equity/debt providers will need to be considered. It is also vital that key contractual relationships are properly documented, and that such contracts contain no undue excessive penalty.
Funding requirements need to be considered including both short-term and long-term financing as well as debt and equity arrangements.
The structuring of loan repayment terms and covenant compliance are important to review at the outset, as well as agreeing a fair price for shares and sound commercial terms for the associated shareholder agreement.
The owners of the business must also decide how they are remunerated. There are conflicting demands of profit extraction, effective tax planning, reinvestment and long-term exit which need to be carefully considered at this stage.
Would you like to know more?
As your business grows and evolves, you will face unique and complex challenges to navigate along the way. To address these effectively, our business advisory services team can help.
If you would like to discuss any of the above and how it may impact you, please contact Andrew Sanford using the form below. Additionally, visit our insights sign up page if you would like to sign up to receive our latest news and insights delivered directly to your inbox.
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