Every business venture wants to grow, but managing just how fast and by how much can be a challenge. Grow too fast without planning for it, and you risk upsetting your customers by not being able to deliver. I’ve learned through experience that managing growth requires an almost formulaic balance of forecasting and resource planning.
1. In 2005, we budgeted for 20% growth and wound up at 90%. It sounds like a good problem to have, but it was very difficult to manage that much growth. It forced me to do a much better job at planning for the years ahead. Forecasting is especially hard at the beginning because you aren’t sure what your revenue will be, but building a model and a ritualistic method for prediction is essential. For example, I know now that when “X” happens we will have “X” in the pipeline, which will net an “X%” increase in revenue.
2. Forecasting not only keeps the business from being on a rollercoaster of big ups and downs, but it also helps with identifying the resources to support the growth. If you know that your business is on track to grow 25%, you can predict how much cash you will need to accommodate it. As you get bigger, a system of checks and balances will also help in recruiting the best people. If we know a certain area of the business is growing faster than another, we can better identify the skill sets and experience we need. Planning for the right resources at the right time keeps the growth in check and ensures better customer service and satisfaction.