Business growth is built on a cornerstone of great service and great service is built on the foundations of human capital, strong funding and efficient systems.

So, when businesses fail during a sharp growth phase, it is because they either run out of human power, financial resources, or capacity to manage operational issues; and it is usually because of one common problem – the business was not scaleable.

Creating a smart growth environment takes constant planning, execution and reflection – a process that needs to refer constantly back to business scale.

Every year, businesses should identify growth avenues, set growth targets and ensure they are resourced to meet that growth. They need to identify which parts of the business are likely to feel the most stress; existing weaknesses in processes that are likely to buckle under the pressure of expansion; and finance, technology and recruiting requirements. They then need to create a scaleable management model that solves these issues and encompasses the following areas.

Human capital
Research by the Economic Intelligence Unit has shown that companies that manage people well are tipped to outperform those that don’t by between 30-50 per cent. Conversely, those that don’t will struggle to grow. Human capital is perhaps the most difficult area in which to ensure scaleability because it is the most unpredictable. But businesses can keep a keen eye on employee satisfaction rates, engagement levels, pay and hours. Don’t discount the value company culture has on business performance, and recognize that culture is largely determined by leadership. If people are working longer hours during growth periods, make sure they are being paid or rewarded in some other manner. If you plan for growth, recruit in advance and ensure there are succession plans for each role. As a quick guide your organisational structure should peg growth in the business – if you double turnover, double staff. Ensure there are training and development plans for each staff member so each individual are aware of career path opportunities and how they can progress. Develop and communicate a clear employee value proposition to attract and retain talent.

Marketing can be seen as an investment made only by larger firms, but it is an active driver of growth to build scale. Specifically, brand development and brand management are important for smart growth companies – those with strong brands retain and attract clients more cost effectively through more efficient channels, and are better able to maintain margins in competitive environments. Consider and define your brand values and customer value proposition, and ensure all aspects of your operation are as aligned as closely as possible. Brands are difficult for competitors to emulate, and whilst they are longer term investments you will be building sustainability into the business.

Risk management
Regularly identifying and reviewing the risk environment is important to building a smart growth environment. Consider all areas for potential risk – clients, suppliers, financiers, staff, competitors etc – and ensure that the key risks with highest probabilities have robust contingency and emergency plans underpinned by processes to run through.

Finance and funding:
It is important for SMEs to establish business finance that grow with the business. Debtor finance is an ideal financing tool for smart growth businesses because it grows in line with receivables, providing scaleable working capital in line with the businesses requirements.

In terms of other financing options, it is advisable to review all lines of credit annually with an eye to expected growth. Build flexibility into borrowing relationships and, if possible, make sure you have back-up lines of credit in place with your financiers. Invest in strong relationships with financiers to ensure they are aware of growth plans.

In terms of ensuring smooth cash flow, factoring offers similar scaleability to debtor financing with the added benefit of professional debt collection – just make sure your chosen provider can scale up with your business. Offering a variety of payment methods is also important for managing cash flow.

Systems and processes:
Often systems and processes that work in a small environment don’t cut it when the pace picks up, leading to poor quality control, employee disengagement and customer complaints. Conduct a ‘stress test’ on your business through scenario analysis. Systems and processes include technology infrastructure, quality control and operations and communications.

When purchasing software or equipment, scaleability should be a prioritiy. Also, plan technology purchases in advance because implementing a new system in a growth phase can be disastrous.

Quality control:
As a business grows, cracks appear in quality control systems and these can spread unnoticed. Establish management and staff accountability against benchmarks to catch these cracks while they are manageable. Also, establish quality control monitoring systems to ensure quality control acts are being performed daily.

Operations and communications:
When people get busy during growth phases, the communications needed to ensure a smooth operational flow often break down. It is important to define duties and accountabilities up front and ensure regular reporting on benchmarks and metrics that may point to a problem.