For fast-growing US startups and mid-size companies experiencing rapid growth, it is important to be aware of the risks and challenges involved. Growth is positive and should be embraced, but it can present legal, financial, and operational risks. So, how can you stay agile while navigating these risks effectively? Keep reading to find out more.
Growth Brings Exposure
Scaling a business creates many new types of risks that you need to be prepared for. Larger operations often mean that you need to hire new staff to manage the workload, but rapid hiring can introduce HR and contractual risks. For businesses expanding overseas, there are differing tax laws, currency fluctuations, and regulatory environments to navigate. Many businesses also find that their reputation suffers as their business evolves and changes, which can cause growth to backfire. Finally, tech systems can become strained due to data security and/or integration challenges.
Balancing Speed with Structure
So, how can you protect your operations during periods of growth without adding unnecessary red tape? Structure is key when it comes to growth, which means implementing scalable systems that can improve the decision-making process, including clear approval workflows, automated compliance checks, and data-driven KPIs.
When to Formalise Your Risk Processes
It can be easy for startups to have informal controls in place and to operate on instinct, but this will not be sufficient as your business grows. When your company grows from 10 to 100+, you should start to implement stricter controls such as structured audits, established policies, and use specialist advisors. Establishing these systems early makes them easier to integrate, and establishing accountability can help with stability for long-term growth.
Solutions to Keep Pace with Scale
It is important to recognise that risk management is not just a one-off - it should be viewed as an evolving toolkit. This can involve using financial hedging strategies to protect your business against currency fluctuations during international transfers and using the latest cybersecurity measures to protect your business and data against the very latest threats. Growth will always create new risks, so you must always anticipate these risks and take steps to mitigate them to benefit from scaling your business.
Growth is positive and can help your business compete at a much higher level, but you must always be prepared for the risks that come along with scaling the business. When you are fully prepared, you can navigate these risks and grow your company with confidence so that you can reap the rewards.
