Many companies reach a point where there is demand, the team is good and the product works, yet growth stalls. The reason is often not sales or marketing but finances: money, systems and management information cannot keep up with the company\u2019s growth.<\/p>
Below are the five most common reasons why growth gets stuck on finances.<\/p>
New orders often mean materials, inventory, salaries and prepayments to suppliers before the client has paid. The faster the company grows, the more money is \u201cin transit\u201d. Without a cash flow forecast, this comes as a surprise just when everything seems to be going well.<\/p>
If prices were set when the company was smaller, they may not cover the new costs: management, software, an office and another employee. Sales grow, profit doesn\u2019t. Profitability by product, client or project shows where prices need to be reviewed.<\/p>
A growing company has more products, clients and projects, sometimes also more companies and countries. If the accounts only show the result for the company as a whole six weeks later, the owner cannot see where growth is actually making money.<\/p>
To finance growth, the bank asks for a forecast, an investor asks for a financial model, and both want to see that the company\u2019s numbers can be trusted. If these have to be put together at the last minute, the financing is delayed or doesn\u2019t happen at all.<\/p>
At the start this makes sense. As the company grows, however, the owner becomes a bottleneck: every quote, payment and investment waits for their time. The more decisions rely on clear numbers and agreed rules, the less growth depends on one person.<\/p>
Reverse Resources quickly grew international: a head office in Estonia, companies in Bangladesh and India, three business lines and many stakeholders. Ann Runnel and one of her team members have said they have been trying to rebuild a Zaporozhets into a Lamborghini while still driving it. Ann describes the earlier situation as finances trailing behind the company\u2019s development. Working with KL Raamatupidamine, the systems of three countries and the business lines were brought together into one set of management information in three months.<\/p>
Now we can do it.<\/p>Ann Runnel, founder and CEO of Reverse Resources (read the full story<\/a>)<\/cite><\/blockquote>
Renoproff: time for the core business<\/h3>
Renoproff repairs heating and ventilation flues in private houses and housing associations. From the very start, the company decided to entrust its accounting to professionals so the owners could focus on developing their business.<\/p>
The most useful thing is that we don\u2019t have to deal with the intricacies of accounting ourselves. We need answers to our questions about how and what to do, and we get advice quickly.<\/p>Janno Rebane, Renoproff O\u00dc<\/cite><\/blockquote>
How finances can keep up with growth<\/h2>
- A solid foundation.<\/strong> Monthly accounting<\/a>that is ready on time and can be trusted.<\/li>
- Management information every month.<\/strong> Financial controlling<\/a> provides a management report, budget vs actual comparison and KPIs.<\/li>
- Cash flow forecast and financial model.<\/strong> Part-time CFO<\/a> helps you plan growth, talk to the bank and prepare the numbers investors want to see.<\/li>
- Systems that reduce manual work.<\/strong> Software and integrations<\/a> make the bank, e-shop, inventory and accounting work together.<\/li>
- Several companies?<\/strong> See how we keep a group\u2019s accounting<\/a> in one place.<\/li><\/ul>