You started your business three years ago. You made it through the first three critical years. Now suddenly business is booming. Your phone is ringing off the hook. You have more business than you can handle. What do you do? Your first thought is, “I can’t do this alone.” So, you take on additional employees. Next, if you’re a manufacturing company you’re definitely going to need more inventory. It’s payday but all your cash is tied up in inventory. You spent a significant portion of it on materials and inventory. With your receivables due 60 days from invoice, your employees are not going to get paid anytime soon. You have begun to grow out of business.

How do you avoid the threat of growing out of business? Here are five tips to ensure you manage through sustainable growth.

1. Project Growth: Before going into business develop a business plan with financial projections. If this is your first time in this particular line of business, research industry benchmarks and make sure that your projections are in line with industry standards. Refer to the projections often measuring them against your current performance.
2. Secure a Line of Credit: A working capital line of credit can you manage the day to day operations of your business become familiar with your businesses cash cycle. Ask your CPA or bookkeeper to assist you with preparing a cash flow statement, so that you can be aware of how cash flows in and out of your business. Once you understand this you will be in a better position to manage your revolving line of credit.
3. Retain Earnings: Don’t drain your business of all of its equity. Businesses that retain earnings can fund their own growth.
4. Focus on your area of expertise: The lure of greater margins trading in a field outside of your area of expertise may artificially spur growth but may very likely impact your core reputation. Avoid this needless risk.
5. Manage the balancing Act: Don’t put all your eggs in one basket. Be careful not to create concentrations within your client base. Instead, determine if there are opportunities to drive the volume of transactions with clients that average less. This will ensure that If you lose a client, your profits want suffer.

Growth is a sure sign that your business is successful. However, if your growth is not managed you can’t sustain it and you’ll never see the fruit of your labor on the bottom line.