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mistakes

4 Mistakes Growing Companies Must Stop Making

Growth is often the fruit of hard work; however, when a company grows without a strategy, it can become a pain point for the business. During growth, the company must be flexible and make transitions to keep up with the transformation. Failure to do so could mean the end of the business. Here are a few mistakes that fast-growing companies need to stop making if they want to continue to thrive:

Mistake #1 Borrowing too much money

Just because you can borrow a lot of money, doesn’t mean that you should. Take a the time to thoroughly evaluate your entire business. Make sure that there is a equitable purpose for each dollar that you borrow.

Mistake #2 Not having a financial team

Before you make any financial decisions, you should consult a professional. An accounting and finance professional will be able to break down the numbers of your business and provide the proper guidance that you need to make the most informed choices. You might, consider hiring a consultant until you are ready to add a full-time financial expert as part of your regular team.

Mistake #3 Spending too much money

Just because business is good right now, doesn’t mean that will always be the case. Most businesses have lean times, so you should make sure that you’re keeping back enough capital to help you navigate harder times. Until you know that your business can handle heavy spending, be money conscious about each and every purchase.

Mistake #4 Hiring “bargains” instead of “experts”

One of the biggest challenges for growing companies is the urgency they feel to hire  when demand for their products or services increases. Therefore, it’s common to make mistakes as growing companies strive to string together a team quickly. This can lead to hiring employees based on their pay grade rather than their expertise, which can cost more in the end.  Hiring bargain staff might allow you to get twice as many employees, but if those employees don’t have the skills or motivation required to hit their targets it could cost you more in the long-run.  Remember, you get what you pay for.

Fast growth does not guarantee longevity. If your business is starting to grow, don’t stop aggressively nurturing it until it forms solid roots.

succession planning

Succession Planning: Considerations

It likely comes as no surprise that 62% of family businesses are passed on to the next generation. However, you may be shocked to learn that only 18% of those businesses are done so with proper succession planning. Lack of succession planning can adversely affect the success of the company.

The Most Difficult Transition

The most difficult transition for a business is when it is passed between the first and second generation. The reason is most likely because this type of transition has never occurred for the business, so each challenge will be new. Because the business has likely only had one leader up until this point, there will need to be careful considerations for the new vision of the company and how leadership may change going forward. You can smooth the transition by doing the following:

  • Create a family vision
  • Prepare for challenges
  • Create a transition plan

Second to Third Generation Transition

This scenario is likely easier than the first one described. The reason is that now the business can rely on the previous experience to help them through the process. Still, there will need to be some care given to how this particular transition will take place. In order to make sure that the succession goes as planned, you should prepare for the following:

  • Create a family employment policy
  • Create a board of directors
  • Prepare for following generations 
  • Fine tune the succession plan

Succession Planning Overview

Succession is a pretty common occurrence among family business owners. It’s a way to ensure that the company continues to thrive. However, care should be given to ensure that the transition is smooth and doesn’t cause too much disruption to the operation. Failure to complete proper planning could mean issues for the business and may even cause some family strife.

It’s important to remember that this process is lengthy and may require considerable amount of time before it is completed. Make sure to remember the bigger picture when making changes to the company during this time, and ensure that you remain true to the company and the family’s vision.

For more business planning advice, check out Forecasting: Optimizing Business Planning.

forecasting

Forecasting: Optimizing Business Planning

Forecasting tools make a substantial influence on how quickly and efficiently companies are able to uncover insights that will influence their productivity. In today’s financial world, the sheer amount of data produced is impressive. However, with that large amount of data, it can be difficult to distinguish which insights are the most influential.

In years past, corporations relied heavily on antiquated analytics in order to create strategies and make important decisions. However, new forecasting tools are allowing companies to focus on advanced analytics to help make determinations about customers, data, and markets.

Why Forecasting Matters

The intent is to generate more meaningful insights from a larger portion of data. The truth is, with so much data at play, it can be easy to overlook valuable information. Unfortunately, missed information could mean a missed opportunity as far as the development of the company is concerned. 

Essentially, searching for valuable data without forecasting could be very much like searching for a needle in a haystack. Forecasting could simplify that and allow companies to focus only on the most meaningful data that has a real impact on the present and future of the business.

Forecasting could make it possible to understand how a company may evolve over time. This could lend itself to creating better customer interaction or even developing a new product. The idea here is that forecasting will allow companies to see into the future with actual evidence in the form of the proven analytics.

Overview

While the finance industry is certainly excited about such advancements, seeing the success rate in this industry could encourage other industries to start using the same methods. The ability to quickly answer questions, perceive risks and evaluate company performance can be advantageous in a number of fields. Finance may just be the industry that leads the way for others to catch on to the many benefits of effective forecasting.

To find out about DLC’s Forecasting Model Creation and other services, click here.