Planning for Growth: Avoid the Growth Gap
Some measure of growth for a business is inevitable.
Sales are naturally going to increase as your business develops.
However, if you are not careful you can be caught in a growth gap. This is when the increase in sales overwhelms other aspects of your business.
Not all areas of a business grow at the same rate and sometimes are not able to respond to fast enough to reflect changes in other areas of the business.
For example,if you are getting $1,200 in orders a day but operations can only produce $900 of goods or services, you have a growth gap. In order to adapt to such a situation, you would need to extend deadlines, add overtime and ignore maintenance schedules.
In this scenario, other areas of the business may also be trying tokeep up. Such as the finance department, which still may be functioning as if the company were only bringing in $600 a day.
This will lead to bills being paid later, extended credit longer than needed and a slowing of cash flow.
Different aspects growing at different rates. Note: this diagram is hypothetical.
A growth gap like this can lead to low employee morale as tensions and stress rise. Some may even think of quitting.
This is why it is important to anticipate how each area of your organization will be affected as you grow.
An excerpt from Your Business Matters: Strategic Growth by Ted James and Barbara Mowat