Some growth advice??

[wmbhajans]

I started a recruitment business for the hospitality industry four years ago. I am from a chef background and although my restaurant business skills are good, I went in this a bit blind except for the rule, dont spend more than I have to. This helped and after scraping through the first year, plodding through the second and starting to do well in the third, we now seem to be doing consistently well and growing. The problem is we have reached a point where we are adding staff every few months, we have done from 3 over a year ago to 10 now. Each time we add on someone new, the overheads go up, the capital investment, ie new computers, desks etc go up and so does the revenue, but this is where it gets scary. There really seems to be an unlimited amount of business for us, but when we take on too much business we find our self less effective. Then we hire a new person to handle the extra business and of course the overheads go up. Long term we know its good to keep growing, but we seem to keep spending and spending on growth. Any ideas on if this is a feasible way forward, or should
we consolidate for a while and just build cash reserves. I suppose the questions is, how fast should you grow!

Before going into business I had read about companies that grew too fast. I couldn't understand how that could happen. This year I found out. We experienced our share of problems from growing so quickly. My suggestion would be to make sure these new employees are fully trained and not just hired and thrown into the fire. And that as long as you're not going into debt for this growth you're fine. You may want to build up some cash reserves at the same time.

Good luck,

Aaron

[daffimaster]

Growth takes capital. There are actually formulae that I learned in economics classes in college (but have now forgotten) which can prove this. In simple terms, as I recall it, a business can only grow sustainably over time at a rate not greater than its return on invested capital. Thus, if you want to grow faster than that, you have to add more capital to the business.

That said, that only addresses the financial impact of growth. The operational side is important also, as Aaron points out above. One of the hardest things about being the owner of our small but growing business is the time it takes to train and integrate new staff into the infrastructure of our firm. We have a good set of standard practices for orienting, training and deploying new caregivers, but when we add a new person to the administrative side of the business we have to spend a lot more time on them. That means that there's less of me available for the other things that demand my attention (I'm the accountant, IT person, marcom writer and overall leader).

- Tim

[hurleygurl777]

Can I suggest that you take a step back from the coalface to decide what you want from your business.

• Do you want to work IN it - own your own job?
• Do you want to build it up and work ON it - systemize it?
• Do you want to sell it?

Once you've decided these things it's easier to work out what the business should look like to achieve your goal.

Frankly, if you don't know what you want your business to be you'll find yourself working harder and harder to fund something you might not even like and might not give you want you want from it at the end.

I had a business in a similar position - my third year's sales was over twelve times what I did in my second year. We were doing more a month during the third year than we did the entire second year. It can be an exciting ride but it chews through cash and can be very stressful.

[Goldendults]

seems like to sustain the growth you are experiencing, you can find a way to collect on your services faster (don't do this at the expense of invaluable relationships), perhaps there is something on the operations level that can be adjusted to make this happen faster. Another method might be to establish a way to streamline your operations. Without much of an idea of how your company is structured, its difficult to give pointers. One instance could be to have associates more specialized in certain processes, where they only need a few resources, rather than be broad generalists who need aspects to all resources.

in general i would want to figure out where i wanted to be....what size, what income....and aim for that....


..personally i dont want ot be a franchise or have 20 employees..i want a good income at a level i like...and i like the actual work...so im not trying to get rid of that part of my job.... having 20 more employees sounds awful...making more money with less hassle sounds heavenly....
big isnt necessarily better.... you can be a great and profitable business at many different sizes....
try and figure out what you really want...