Growth feels exciting when your organization is expanding rapidly; revenue climbing, new clients coming in, and your team expanding are all byproducts of exciting growth. From the outside, it looks like success is happening at a fast pace, but inside your organization, the experience could feel very different. Even though you may be proud of the fast growth, there is increased payroll, more sizable contractual commitments, large receivables, credit line stress, more compliance, and risks that your team may feel stretched.

As a leader, we need to guide that growth in a way that builds long-term controlled value and stability. There is a difference between fast growth and healthy growth. If you chase the speed of growth without structure and discipline, you can create challenges. Things like financial stress, turnover, restricted credit lines, culture depletion, and deteriorating customer relationships are byproducts of uncontrolled growth.

Signs of fast growth are; exponentially higher sales, more demand, mergers, acquisitions, investment capital, increases in staff, and rapid expansion into new markets and products, all positive, visible proof that your strategy is working. It can boost confidence across your team as everyone enjoys success. It also may come at a cost. Your control will begin to dwindle if you reach outside for capital money, mergers, or investors.

As organizations experience rapid growth, they can hit roadblocks. Speed of growth can hide deficiencies. When everything is moving fast, there’s little time to step back and reflect on whether your systems are performing at profitable efficiency. Other things to consider are what percentage of business comes from a limited few customers or limited solutions. Diversification and recurring business are critical to stability and long-term consistent growth. Having your business dependent on a limited customer base is threatening, as you could be at the mercy of their demands. Dependency on only one solution can also be dangerous, as you may be one innovation or acquisition from being on the outside.

Some other byproducts of fast growth are the demand for staff that can lead to quicker and careless hiring practices rather than following an established interviewing and hiring process that is used consistently. New team members may not be properly trained on processes, so ultimately, standards may not exist. The positive culture that helped start your growth momentum could be diminishing, and communication may get fragmented.

In fast growth environments, teams often deal with constant urgency, priorities change quickly, and roles may not be clearly defined. Team members work hard and tirelessly but still may feel overwhelmed and have a “can’t catch up” attitude.

The net is when the vision and execution of growth are outpacing your processes and disciplines. You may see declining service quality, longer decision cycles, team member burnout, and deteriorating morale. You may still bring in increased revenue, but your margins and stability could begin to weaken and show warning signs of future things to come.

Let’s look at what healthy growth should look like.

In a healthy growth environment, your company builds capacity alongside expansion to meet your company’s Wildly Important Goals, or “WIGs.” Your systems, teams, and processes are designed to handle more volume without constant strain and crisis management. You should have clear roles and responsibilities across your teams and always have team members preparing for future advancements. Your processes should be repeatable with your growth. Decisions are being delegated to the proper level of your team’s leadership, and you have created a culture of empowerment.

Another factor sometimes overlooked is that your technology and infrastructure systems are designed to support scale and growth without substantial replacement and retraining cost. Taking these things into account will help achieve healthy growth that will also build a confident culture and team that understands how to operate for now and into the future. This also allows you to focus on planned growth visions, repeatable customers, recurring revenue, efficiencies, and strategy instead of daily firefighting.

Now to the financial side of healthy growth. Growth should always allow you to pay timely on receivables, even if you have customers that are slow paying. You want rainy day funds to cover payroll. You want to continue to build a good credit reputation so you can continue expanding credit lines and also have great bank relationships with at least two banks. Limit extended terms to customers with good credit ratings. Don’t take risks on potentially risky customers for possible growth and profitability. One large bad debt could have a rippling effect on your manufacturing partners and banks who have trust in you, your payroll, and your credit reputation. One option to avoid receivables risk and create fast capital is to consider selling off receivables to a factoring agency to protect your risk, but it will come with some lost margin.         

Most successful companies go through periods of fast growth, but you always want to build positive growth energy. Business momentum is like getting a big rock started rolling. It takes a lot of energy to get a business growing, and the key is knowing when to shift your focus. Shifting more toward healthy growth may require you to step back and evaluate your organization. Look at your personnel, processes, team structure, and technology solutions. Identify areas where growth has created gaps. Then focus on building systems that support scaled growth, investing in new platforms and looking to more automation and AI solutions that can assist in scaling. Human capital is usually a major cost in companies’ growth. It will require working with human resources in redefining roles within your team and making sure, as Jim Collins said in his book Good to Great, that you have the right team members on the bus in the right positions on the bus that best fits your growth strategy.

We were all divinely created for success, so I would never want to discourage growth, but your long-term strategy should be to generate a business that can grow exponentially without increasing cost and complexity at the same pace. Maintaining long-term stability and predictability are pillars of a strong business. Quick success can create bad investments and decisions about growth and sometimes inflated egos. Your biggest joy could become an enormous headache. Controlled growth is much like building a house or large structure.

Once you spend the extra time building the foundation, you can build substantial structures on top of it without having to tear it back down. Yes, fast growth creates excitement and momentum, but healthy growth creates stability and long-term value. As a leader, your responsibility is to balance both. You want to take advantage of opportunities, but you also need to build the structural foundation that supports your long-term objectives. When you align speed with capacity, your business becomes stronger with each phase of growth and creates stability and future predictability.