Businesses don’t fail only when they are hitting the rock bottom or not doing well. The opposite of that may equally be true too. Many companies could just fall flat on their face during the expansion process as well. Growth does not come easy in the business world. As a business grows, it goes through several big and small changes.
Over the years, coping with this challenge has proven to be very tough for many companies. That’s why every year several businesses crumble just because they can't keep up with the financial face ups associated with their growth.
Here is the list of 7 most anticipated financial challenges in the process of business growth:
1. Rising interest rates
There is a famous adage which goes like “it takes money to make money”. Business community strictly subscribes to these words. When a business is all set to take a big jump, it takes money to do that. And, more often than not, the most obvious way to get the required amount is to borrow it.There might be so many business loan schemes but none of them come up with enough breathing space for the borrowers. Whichever loan scheme you may apply for, at the end of the day, you will be eligible for a decent interest rate. On top of that, interest rates are always on the hike which makes the borrowing an even more insecure measure.
Perhaps, this problem is more valid for small businesses. A study finds that more than 20 percent of them cite the high-interest rate as their top problem. To be on the safe side, you must map out how to pay your business loan before applying for it.
2. Hiring new staff
That’s one of the most prominent financial challenges. Let suppose you have closed a massive deal, can you execute it with perfection without adequate manpower? We all know the answer is a big no. The current age is unarguably the most advanced one in terms of technology. Companies are depending on machines more than history has ever recorded. Still, machines can't entirely replace humans in corporations. At least, not in the distant future.The hiring process has a lot to do with capital. Many businesses contact hiring companies to take over this task on their behalf. Others do it by the old pattern of advertisements. Either way, you are sure to spend significant bucks.
It is the hallmark of a smart businessman to also consider time as valuable as money. Companies spend about 40 percent of their time in the hiring process. Identifying the profiles of suitable candidates, inviting them for interviews and then finally conducting interviews are time-consuming activities.
The above infographic shows in-depth hiring costs in 2019
3. Investment on technology
Usually, it is not difficult to stay in touch with the staff when you have a handful of employees and the geographical locations are limited. You can correspond with them through phone or creating a WhatsApp and Facebook group does the job. But as soon as a corporation begins to expand, effective communication becomes a mounting task.Mind you, poor communication comes up with a heavy cost. A survey based on 400 companies each having 100,000 employees says that all of these companies are losing 62.5 million dollars per year due to the communication lapses.
Therefore, advanced technology becomes the need of the hour in the growth process and it does not come cheap. As your business swells, you start looking for a quality workforce and begin to recruit employees from remote places. Many talented millennials would rather prefer working from their home than coming to the office location.
Moreover, day-to-day money management also gets tougher without proper technology. Business owners can do it on their own to an extent but after that threshold is reached, they need an automatic mechanism. With inadequate management tools the problems like the following become quite commonplace:
- Incorrect calculations
- Losing the track of expenses
- Mixing personal and business purchases
- Dealing with invoices and receipts
4. Marketing
We are surrounded by so many cheap digital marketing methods. Perhaps, they do a fine job until your business shows the signs of expansion. Growth forces you to market your product for a large audience. For this purpose, it becomes mandatory for you to hire a marketing agency, freelancers, influencers and so on. These people are most likely to maximize the range of your marketing message. But, In order to take their service, you need to allocate a solid budget.5. Training new recruiters
As soon as you are done with the recruitment, you can’t send the newly hired lot for the work right away. The training follows the next. It is no more one of those “good things” to do. Of late, training has actually become a requirement.You only know your new employees from the surface. They might be coming from a different company culture which probably stands in contrast with yours. So acquainting with new company culture and training them to use technology takes a lot of you financially.
The stats explicitly illustrate that both time and money are put in to train new staff
6. Balancing quality along with the quantity
When you have fewer customers to tackle, it is relatively easier to maintain the quality of your products. That's why it is not unusual for businesses to compromise on quality when the demand for their product increases. But, in the long run, you can't sustain your place in the market unless your quality also up to the mark.During your growth phase, you will have to consider getting rid of outdated techniques and invest in new ones to keep the quality in check. A modern scientific approach is a must to ensure the quality on the bigger scale which requires reasonable resources.
