Building your Business from the Ground Up
3 Risks of Growing Ahead of Your Business Infrastructure
Before setting out to build a skyscraper, teams of architects, engineers, consultants, construction workers, contractors and many more develop a plan for how this gravity-defying structure will rise tens, if not hundreds of stories above ground. Each critical element is painstakingly engineered so the integrity of the structure remains sound as it rises to heavens.
Your business and the infrastructure it is built upon should be no different.
If you’re going to effectively scale and grow from a single-story startup to luxury high-rise then you need a blueprint to get you there.
When you start off as a small business with just a couple of employees everyone wears multiple hats so it's easy to brush off the need for any sort of formal structure. The collective focus is on revenue-generating activities while any thought of scalability comes second, at best.
The truth is, taking a little time to formulate a blueprint for your business while establishing some short- and long-term goals will not only give you a target to shoot for but the ability to effectively scale on your way to meeting those goals.
Failing to establish a sound infrastructure can place you and your business in a risky situation. Let’s look at some principals to consider:
Cost Bloat - As your business continues to grow, it becomes increasingly more difficult to fully understand all of the costs being incurred if there isn’t the proper structure, checks and balances.
Once the cost approval process is delegated and there are more people involved, if strategic thought hasn’t been used to develop the workflow then the risk of fraud and error is significantly increased.
These risks become amplified in larger organizations where costs can rapidly accrue without the proper people and departments being aware.Organizational Structure - With the addition of new staff members comes additional roles, responsibilities and the delegation of tasks. With a proper organizational structure in place, each department head will have a clear understanding of the business objectives to be met and can be held accountable for meeting those marks.
This structure also empowers leaders to effectively delegate job duties to other team members to ensure project demands are met.
And with clearly defined lines of communication from the CEO to operational management, you can be sure company and department goals are fully articulated and understood.Regulatory Risks - Even the smallest of businesses have to contend with the increasingly complex world of regulations, requirements, licenses, insurance and taxes, amongst other things.
Through the growth process, these risks and requirements only compound. Therefore, having the proper structure in place early on means the right team members will be empowered to maintain the highest level of knowledge and accuracy when dealing the things like:
Financial Reporting Requirements
Internal Revenue Service (IRS)
State Sales Tax Reporting
Workers Compensation
Audit Requirements
Investor reporting
HR Requirements
Discrimination/ Sexual Harassment
Employment Law
Disciplinary Process
Health and Safety
Whether you’re just getting started with your business or you’ve been at it for years, Hatcher CFO can help you formulate a blueprint for success. Contact us today to discuss your specific situation and needs.