When you are a new business owner, your primary goal is to break even as it opens the door to profits. You are at the point where you have customers who are paying for what you are offering on a regular basis. Your cash flows begin to register inflows. It's an awesome feeling to steer your venture to profits. Profitability drives the next natural goal of the business: growth.
The growth phase is one of the most exciting and most challenging phases of entrepreneurship. The prospects are looking up. You are establishing a footprint on the market. Customers are buzzing, and the sales numbers are incredible. Every business owner strives to develop her business quickly to realize its potential.
Get ready to steer your business through an explosive phase that can make or break it. Take some time to understand the impact of rapid growth, and plan for it. Let us review some of the risks associated with rapid growth.
"Ensure your operational plan is not affected by such glitches. Project your cash flows and prepare for the different scenarios."
"All change is not growth, as all movement is not forward." Ellen Glasgow, American Novelist
Cash Flow Crunch
Your business is getting bigger. There is an increase in revenues. On the other hand, the expenses also get bigger. You spend more on tools and equipment, software, inventory, and overheads among others. It becomes hard to track all your expenditure due to the sheer volume. This injects problems into your cash flows and one month of bad sales could deplete your disposable revenue. Similarly, failing to meet your short-term obligations such as payroll and rent can force you to shut down.
You may face delays in collecting receivables. Ensure your operational plan is not affected by such glitches. Project your cash flows and prepare for the different scenarios. Make sure you can service essential expenditure even during a cash crunch by creating an emergency fund.
Due to rapid growth, your expenditure may surpass your revenues. This is natural as your business prepares to deliver more and quickly. Strengthen your receivables collection department to minimize delays in revenue. It is unwise to have your cash flow dependent on one revenue source, so try diversifying your client base to minimize risk. It can be detrimental if your single big client fails you.
Lack of Financial Groundwork
It is time to minimize exposure to risk, which maximizes returns. Don't take credit to drive growth. Taking a loan increases your business' exposure to risk. There is a fine line between the interest you pay on the high-interest bank loan and the margins you make on your revenues. It is a ticking time bomb waiting to explode when your business hits a bump.
If you are paying yourself a salary, it is critical developing a saving habit. Taking a piece of your profit and allocating it to your emergency fund empowers you to clear debts and reduce risk. If you are running the business from your private funds, saving money and paying off debts it even more important. It is an excellent way to ensure your business does not leave you broke. Putting money aside on both fronts will enable smooth transitions and survival of unexpected setbacks.
Shore up reserves for your operational expenses. This empowers you to ride the bad waves. It will allow you to stay afloat in times when you are not making money. Having a rainy-day fund buys you time to re-strategize and get back to profitability. Usually, in such situations, buying time is all you need.
You can employ professional help for more than just taxes. Strive to stay updated with the latest cash flows. This helps you track your expenses against sales on an ongoing basis.
Risks of Operational Inefficiency
Growing your sales is good for profit. However, it also requires you to do more and faster. A rapidly growing business stretches and bends the inner structures, which are usually rigid. Attention to detail decreases and sometimes quality may become a challenge.
Rapid growth will force you to change the way you run things. A bigger workforce requires correspondingly strong leadership. The shift to the new systems and policies may not be as smooth. Pulling your people from the nitty-gritty to leadership roles might negatively affect productivity. Similarly, small flaws in management will be amplified. Be ready to address hiccups arising from those operational changes.
"Growing your sales is good for profit. However, it also requires you to do more and faster."
Hiring the Wrong People
A vibrant workforce is essential to drive rapid growth. Hiring a large number of people in a short time makes it hard to evaluate everyone properly. Your biggest challenge is to find the perfect person for the job. A rapidly growing business means heavier workloads than before. This reduces the time you put into issues such as employee welfare.
Human resource management becomes a real thing. You will need teams to look after the human capital. This eats a more significant chunk of your budget. In addition, with a big staff, you do not always get an exact match for the position. At times, you are forced to expedite placements to ensure production does not collapse. Don't fall into the trap of hiring inadequate people. It will lead to an organizational mess later on.
Cultivate a company culture that keeps your workforce motivated. Make it clear on what is the acceptable policy. Your new staff may not tick all the boxes in your requirements. Use your judgment to determine who is most useful to your business now.
"Try to keep a close tab on customer feedback. Follow up quickly when the levels of harmful feedback escalate."
Reduction of Customer Service
In fast-growing businesses, the demand for everything rises. This includes your time. You cannot put as much time and energy as before into projects. Success becomes a double-edged sword. The demand is so high that you cannot afford to pay individualized attention to all the projects. Similarly, you might be forced to spend less time even on your special accounts.
This lack of attention also affects your long-term relationships with clients, colleagues and business partners. In addition, prepare for a drop in service quality when you delegate departments such as customer care. Plan to take remedial action in specific circumstances. Poor customer care leads to a decline in business. The link is that customers feel disconnected from your company and may start giving negative ratings and reviews or even jump ship.
Try to keep a close tab on customer feedback. Follow up quickly when the levels of harmful feedback escalate. There is a good chance you can do something internally to resolve the issues. An increase in customer complaints signals a bottleneck in your production chain. Attend to it quickly to avoid losing repeat customers.
Ensure your customer care teams are re-trained and motivated to deliver on your goals. Be on the lookout for adverse ratings. This is especially true in the digital age. Have a policy that outlines how to respond to negative feedback on all platforms. For instance, a proactive reputation management strategy will help you keep your online world free of negative content. It also ensures quick and professional responses to bad press.
A primary goal of every business is profit. Sometimes it makes sense to sacrifice growth to safeguard profits. Rapid growth involves successfully managing high-risk situations. It puts the business under intense pressure from multiple angles. There are steps you can take to ensure your business handles rapid growth successfully. These include planning for expansion capital, preparing to scale up operations on all fronts, engaging the right talent and sticking to financial plans among others.
Ensure that your workforce is aligned to your business goals. This creates a harmony that lets you do business faster. On the positive side, it keeps the employees motivated to deliver beyond expectations.
Rapid growth is a thrilling phase of your business. It promises lucrative returns. Elevate your leadership and learn to ride the rough waves that come with it.
Women of the Middle East have made significant strides in the past decade in a number of sectors, but huge gaps remain within the labor market, especially in leadership roles.
A huge number of institutions have researched and quantified trends of and obstacles to the full utilization of females in the marketplace. Gabriela Ramos, is the Chief-of-Staff to The Organization for Economic Co-operation and Development (OECD), an alliance of thirty-six governments seeking to improve economic growth and world trade. The OECD reports that increasing participation in the women's labor force could easily result in a $12 trillion jump in the global GDP by the year 2025.
To realize the possibilities, attention needs to be directed toward the most significantly underutilized resource: the women of MENA—the Middle East and North African countries. Educating the men of MENA on the importance of women working and holding leadership roles will improve the economies of those nations and lead to both national and global rewards, such as dissolving cultural stereotypes.
The OECD reports that increasing participation in the women's labor force could easily result in a $12 trillion jump in the global GDP by the year 2025.
In order to put this issue in perspective, the MENA region has the second highest unemployment rate in the world. According to the World Bank, more women than men go to universities, but for many in this region the journey ends with a degree. After graduating, women tend to stay at home due to social and cultural pressures. In 2017, the OECD estimated that unemployment among women is costing some $575 billion annually.
Forbes and Arabian Business have each published lists of the 100 most powerful Arab businesswomen, yet most female entrepreneurs in the Middle East run family businesses. When it comes to managerial positions, the MENA region ranks last with only 13 percent women among the total number of CEOs according to the Swiss-based International Labor Organization (ILO.org publication "Women Business Management – Gaining Momentum in the Middle East and Africa.")
The lopsided tendency that keeps women in family business—remaining tethered to the home even if they are prepared and capable of moving "into the world"—is noted in a report prepared by OECD. The survey provides factual support for the intuitive concern of cultural and political imbalance impeding the progression of women into the workplace who are otherwise fully capable. The nations of Algeria, Tunisia, Morocco, Libya, Jordan and Egypt all prohibit gender discrimination and legislate equal pay for men and women, but the progressive-sounding checklist of their rights fails to impact on "hiring, wages or women's labor force participation." In fact, the report continues, "Women in the six countries receive inferior wages for equal work… and in the private sector women rarely hold management positions or sit on the boards of companies."
This is more than a feminist mantra; MENA's males must learn that they, too, will benefit from accelerating the entry of women into the workforce on all levels. Some projections of value lost because women are unable to work; or conversely the amount of potential revenue are significant.
Elissa Freiha, founder of Womena, the leading empowerment platform in the Middle East, emphasizes the financial benefit of having women in high positions when communicating with men's groups. From a business perspective it has been proven through the market Index provider MSCI.com that companies with more women on their boards deliver 36% better equity than those lacking board diversity.
She challenges companies with the knowledge that, "From a business level, you can have a potential of 63% by incorporating the female perspective on the executive team and the boards of companies."
Freiha agrees that educating MENA's men will turn the tide. "It is difficult to argue culturally that a woman can disconnect herself from the household and community." Her own father, a United Arab Emirates native of Lebanese descent, preferred she get a job in the government, but after one month she quit and went on to create Womena. The fact that this win-lose situation was supported by an open-minded father, further propelled Freiha to start her own business.
"From a business level, you can have a potential of 63% by incorporating the female perspective on the executive team and the boards of companies." - Elissa Frei
While not all men share the open-mindedness of Freiha's dad, a striking number of MENA's women have convincingly demonstrated that the talent pool is skilled, capable and all-around impressive. One such woman is the prominent Sheikha Lubna bint Khalid bin Sultan Al-Qasimi, who is currently serving as a cabinet minister in the United Arab Emirates and previously headed a successful IT strategy company.
Al-Qasimi exemplifies the potential for MENA women in leadership, but how can one example become a cultural norm? Marcello Bonatto, who runs Re: Coded, a program that teaches young people in Turkey, Iraq and Yemen to become technology leaders, believes that multigenerational education is the key. He believes in the importance of educating the parent along with their offspring, "particularly when it comes to women." Bonatto notes the number of conflict-affected youth who have succeeded through his program—a boot camp training in technology.
The United Nations Women alongside Promundo—a Brazil-based NGO that promotes gender-equality and non-violence—sponsored a study titled, "International Men and Gender Equality Survey of the Middle East and North Africa in 2017."
This study surveyed ten thousand men and women between the ages of 18 and 59 across both rural and urban areas in Egypt, Lebanon, Morocco and the Palestinian Authority. It reports that, "Men expected to control their wives' personal freedoms from what they wear to when the couple has sex." Additionally, a mere one-tenth to one-third of men reported having recently carried out a more conventionally "female task" in their home.
Although the MENA region is steeped in historical tribal culture, the current conflict of gender roles is at a crucial turning point. Masculine power structures still play a huge role in these countries, and despite this obstacle, women are on the rise. But without the support of their nations' men this will continue to be an uphill battle. And if change won't come from the culture, maybe it can come from money. By educating MENA's men about these issues, the estimated $27 trillion that women could bring to their economies might not be a dream. Women have been empowering themselves for years, but it's time for MENA's men to empower its women.