It’s been said that 2018 is the year of expansion. The year that we all throw off the shackles that have been keeping us from growing. Perhaps Brexit will bring us untold opportunity?
This will sound like great news to Lincolnshire’s many businesses and particularly its legions of burgeoning start-ups. Indeed, who wouldn’t want to see unbridled progress?
Caution must be advised though. When companies grow, it is easy to become carried away on a wave of unfettered optimism. However, companies in our region tend to run into practical issues despite their best efforts. Recruiting and retaining skilled and experienced staff can cause major headaches but it is the financial side that often proves to be most difficult. Any shortfalls in funding or cash flow can spell doom if not managed correctly.
With so many alternative funding streams available to entrepreneurs and established companies alike, it is easier these days than ever to gain capital. So many incentives are available to those seeking a leg up. However, this comes with an immediate danger and risk. How companies use this money is often the reason they run into trouble.
Not putting all one’s eggs into one basket is a tired phrase, but it remains true. Diversifying, rather than concentrating on a singular vision, is wise. Those who seek to grow but remain working for a singular client are highly likely to run into trouble.
One thing to consider is acquiring physical assets. Hiring equipment and staff in the construction or agricultural industry for example will only serve growth so far. The lack of bricks and mortar and machinery can hit companies hard if things start to go wrong.
With so much uncertainty about, including Brexit, companies across our region need to ensure they can recover if their plans start to go awry.
Consider expanding your business premises or purchasing large pieces of well-priced kit. Ring-fencing that kind of value is wise and can be leveraged more easily. The danger of not investing in this kind of self-preservation is having to borrow more when you fall into a hole. By then it could well be too late.
Staffing is also an issue as it’s likely the more your businesses grows the more staff you will need. It’s worth asking yourself if you’ll be able to find the right calibre of candidates easily and whether you can afford to offer a competitive salary and package of benefits. If the answer is no, you may well end up in a situation where your needs outweigh the available resources. Gaps in your plans become more evident as growth occurs, so being prepared is the best route to take.
Growth is of course fantastic, but only when properly managed.
Rick Smith is the Managing Director at Forbes Burton, a Lincolnshire-based company specialising in financial advice and support for directors of SMEs. Forbes Burton gives advice on a variety of subjects, including company turnaround and rescue, limited company closure, company voluntary arrangements and how to deal with HMRC tax arrears.