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Cash Flow, Finance & Accounting, Financial Management

How to Definitively Know When Revenue is Stable Enough for Massive Growth

How to Definitively Know When Revenue is Stable Enough for Massive Growth

Many new business owners find that each stage of business growth brings new rewards and new challenges. If you are the founder of a fast-growing startup and you have big ambitions for growth, it can be hard to know exactly when is the right time to take the leap and scale your company.

 

Here are a few questions that business owners should ask themselves to make sure their revenue is stable enough – and that their business is really ready – for massive growth:

 

1. Can We Attract Interest from Investors?

Business loans can be a great way to help your business grow during the early stages, but often, if a company is going to rapidly scale and achieve massive growth, it needs the help of outside investors, such as angel investors or venture capital (VC) investors. Investors will give you money upfront in exchange for a share of equity ownership in your company. If you take money from investors, you lose a percentage of ownership in your company, but ideally, in the end, you will all share in the profits from your company’s growth.

 

2. Is Our Company Well-Automated?

Ideally, you need to be able to do the same business operations that you’re already doing, but with consistent, repeatable processes at a much larger scale.

 

3. Do We Have the Right Leadership?

Starting a company requires certain skills and personality traits – but running a fast-growing company and leading that company through massive growth often requires different skills. Not all entrepreneurs are the same. Some company founders discover that they need more help with running the company during the rapid-growth stages. This is why it’s important to make sure your company has a great leadership team with a good mix of skills and personalities.

 

4. Do We Have a Strong Company Culture?

As your company grows, it’s crucial to make sure that the company culture – the character and values that are most essential to what your company is all about – does not get lost in the shuffle. Your company culture needs to be more than just “you” as the owner – the company needs to begin to have a personality of its own, with core values that can be taught and internalized among lots of employees. It can be a bit esoteric and hard to define, but preserving the core elements of the company culture is essential.

 

5. Are Customers Coming to Us?

Is your company still hustling hard to find new customers and make sales, or are you starting to get lots of referrals, word-of-mouth and inbound sales inquiries? Once your company is starting to develop a big enough reputation that you are seeing lots of attention and customer interest, even aside from your usual marketing channels, that is a good sign that your company might be ready to scale.

 

6. Are We On Track with Our Business Plan Goals?

You have to walk before you can run, and you need to make sure that your company is already growing steadily before you can grow fast. If your company is already profitable, and is already meeting or exceeding your existing goals from your current business plan, this is another good sign that you might be ready to expand further. Hopefully you have already demonstrated that your company has a good niche within your market, and that there are lots of customers out there who want to buy what you sell. The next stage is to take your product to a much larger pool of customers.

 

7. Do We Have a Predictive Revenue Model?

Are you already able to predict, fairly accurately, where your revenue comes from? For example, if you run a certain amount of PPC ads or Facebook ads or make a certain number of sales calls, do you already know how many new sales leads you’re likely to get from a certain amount of spending or a certain level of activity? By keeping careful records of your existing sales and marketing metrics, you can determine whether your current revenue model is scalable. If you already have consistency in your current marketing activities, you will be likely to succeed at an even higher level by investing in additional growth.

 

8. Do We Have a Great Accounting System and Cash Flow Forecasting?

Ideally, your company should already have a good accounting system in place – whether it’s online accounting tools and/or the help of a certified public accountant – but not just for taxes; your business needs to have accurate cash flow forecasts so you can evaluate your anticipated sales, fixed and variable costs and other factors that affect your overall cash flow. Before your company can grow, you need to know that you have good enough visibility into the financial operations of your company – because as your company scales, the financial side will get more complex. So make sure you have a good foundation in place already by understanding your cash flow.

 

Scaling a company is one of the most exhilarating journeys in business, but be careful not to take the leap until you’re ready. Make sure your company’s financial strength is at the level that it needs to be – with steady, promising growth – and make sure your company operations and team culture are ready to bring on new employees and start serving new customers. If your company is already performing exceptionally well at this current smaller scale, you will be more likely to successfully replicate the components of your success at a higher level.