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Staying Profitable Through Unexpected Growth

by Michelle Fleckner / January 11, 2018

The Beginning of Rapid Growth

When a new business starts off they are cost advantageous and very aware of where and how their profits are being used. However, as business picks up and improves, it's easier to become more relaxed in business spending. It's equally as important to make sure that the tools are in place to stay on a budget, or a company can easily spend all of the money that was intended to be the company's profit. 

Remember, no matter what the size of the company, every company needs a budget that helps them ensure they are still maintaining a profit margin that keeps their business running healthy on a daily basis. Many business professionals have spoken on this topic and they offer some solid advice on what to do to ensure your company does not fall victim to spending through its profitability as unexpected growth ensues.

Consider Culture Changes

One option you could take is micromanaging the business but very few employees like a micro-manager. However, it might be worth it to consider cultural changes to the business environment in which you currently work. Developing processes that help set budgets and guidelines for what can be spent can help ensure you are not overspending and limiting your company's profitability. Set financial goals for profit levels and aim to reach them to keep the company as profitable as possible. 

Use Simple Charts or Other Visual Graphics

Use a simple chart to show how much money your company is taking in and where it's allocated in the budget. Determine how much of your company is willing to spend before you are cutting into your profitability. If you are spending too much you will have to find ways to make more money to keep the profit margins healthy. Once you determine how much you can spend versus how much you need to save, the next step is to establish how you will spend that money. Once the money is gone, it's gone. It's vital to make important choices to ensure you are not overspending. This pie chart can hang on the wall and help employees visualize how much or little is left to spend. It makes everyone aware to ensure they are spending the company's money as wisely as possible.

Make Budgeting an Annual Activity

At the beginning of each year, gather the financial team together to review last year's numbers. Based on the profit margins set then, set more goals for the upcoming year. Determine what you have to spend, what you have to save, and what your projections for this year look like. Determine how you are going to grow your business to take in more money and be more profitable than last year. If you are not on the track you set out at the beginning of last year, re-evaluate to see what you can do better this year. Use this information to create a budget and stick to it to ensure you are profitable as your company grows.

Live Frugally (As a Business)

Living frugally is the best way you can help preserve the company's profitability. If you have a year where you make more money than expected, that doesn't mean you need to have a budget that is higher the next year. Raising your budget based on a percentage of how much you made the year before is safe, but drastically boosting what you spend can put your company's profitability in jeopardy if the profits don't continue to climb steadily every year into the future. Stay on the frugal side of spending to ensure you are becoming more profitable. This helps your business maintain profit margins, as well as plan in case sales have a bad year sometime in the future and are far less than the numbers projected.

Operational Discipline

It's all about operational discipline. The way you run your company and the discipline (or lack of it) will determine how profitable you are. Controlling costs and spending money wisely ensures that any company can grow and still be profitable. Every employee wants to work for a responsible company, and they want to be able to know their company is financially secure moving into the future. Discipline your company's spending as you grow in terms of profit and ensure your own financial stability for years to come.

Employee growth can be an exciting time for a company, but also a scary transition if not prepared. If you're concerned with how to predict and manage growth, view the webinar recording below, "Ready. Set. Grow - Predict and Manage Employee Growth" presented by Michelle Fleckner. Platinum Group offers a free Human Capital Management and Business Enrichment Webinar Series that features local and statewide professional experts who offer valuable insight into successful business practices. 

webinar-predict-manage-employee-growth

Platinum Group is a full service human capital management (HCM) resource that allows businesses to manage their payroll, benefits compliance, track time and attendance and other various human resources functions in a way that maximizes efficiency and eliminates redundancies with the platform, iSolved. For more information about Platinum Group or to schedule a demo of iSolved please visit our website. 

Platinum Group is headquartered in Asheville, NC with locations in Charlotte, NC; Greensboro, NC; and Raleigh, NC. 

Tags: Payroll & Human Resources Company Culture Business Growth

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Michelle Fleckner

Michelle Fleckner

Michelle joined the team in 2017 as VP of HCM Solutions. Her interest is in helping companies identify areas where streamlining and automating would benefit their HR & Payroll departments. Her strengths are organization planning, revenue generation, customer retention & business process automation.