How to successfully grow your business without financial pitfalls

Your business is starting to take off and your turnover is increasing. You are attracting new customers, considering additional staff and thinking about investing in stock, equipment or a larger office. But as your business grows, so do the financial pressures. You are faced with higher costs, longer payment terms and the need to continuously invest. This can lead to cash flow problems and – without proper financial management – ​​to debt. How do you ensure that your business continues to grow healthily without financial problems? In this blog we discuss common pitfalls and how to avoid them.

Why do entrepreneurs get into debt during the growth phase?

Entrepreneurship is a balancing act: you need to invest to grow, but without control, these investments can get you into financial trouble. The most common causes of debt in the growth phase are:

• Too rapid expansion without a financial buffer
  • Additional staff, new equipment or a larger location cost money, but turnover growth does not always follow immediately.
• More customers, but longer payment terms
  • You have large orders, but customers only pay after 30, 60 or even 90 days, while your costs continue.
• Fixed costs too high
  • A new business location, more expensive software, lease cars or more staff can significantly increase your monthly costs.
• Investing in stock without financial security
  • Buying extra products to meet demand, but with no guarantee that everything will actually be sold.
• No good insight into cash flow
  • More turnover does not necessarily mean more profit. If you do not have an overview, you can unexpectedly get liquidity problems.

As your business grows, you not only have more revenue, but also greater financial responsibilities.

How do you prevent financial problems during the growth phase?

To grow successfully without debt, you need to be smart with your finances and keep a handle on your cash flow.

1. Manage your cash flow tightly

• Always make sure you know how much money you have available.
• Work with a financial plan: Make a realistic budget and anticipate peaks and troughs in your cash flow.
• Invoice immediately and use short payment terms: For example, let customers pay within 14 days instead of 30 or longer.

2. Growing without taking too many risks

• Don't take on large financial commitments without a buffer.
  • Don't rent a larger space or hire additional staff without a contingency plan.
• Start with phased growth.
  • Test new products or services on a small scale before making a large investment.
• Consider leasing or hire purchase instead of making large purchases.
  • Machines, vehicles and software can often be leased, so you don't have to pay a large amount at once.

3. Keep your fixed costs under control

• Avoid unnecessary costs.
  • Take a critical look at subscriptions, software and other expenses.
• Negotiate with suppliers.
  • Ask for a discount for larger purchases or longer collaborations.
• Increase your prices if possible.
  • Make sure your margins remain healthy and not everything goes to costs.

By managing your costs wisely, you will have financial room to grow without getting into trouble.

What to do if you get into debt while growing?

Sometimes things do go wrong. Investments go wrong, a major customer pays too late or costs rise faster than turnover. What can you do if you notice that your debts are piling up?

1. Make a financial overview

• Map out all your debts: Which bills are outstanding? What are your fixed costs?
• Determine which payments have priority: For example, taxes, rent, or suppliers that are crucial to your business.

2. Negotiate with creditors

• Ask suppliers for longer payment terms.
• Investigate whether the Tax Authorities can offer a payment arrangement.
• See if you can restructure existing loans for lower monthly payments.

3. Increase your income and improve your cash flow

• Speed ​​up your billing process: Invoice immediately after delivering a service or product.
• Send payment reminders earlier and offer discounts for early payment.
• Consider temporary price promotions to get cash in faster.

4. Seek professional debt assistance for entrepreneurs

• If the debts become too large to resolve on your own, debt assistance is a good option.
• Zuidweg Debt Assistance negotiates with creditors and helps to draw up a feasible repayment plan.

The most important thing is not to wait, but to take action immediately as soon as you notice that you are getting into trouble.

When is Zuidweg Debt Assistance in the growth phase the best choice?

Sometimes the financial pressure is too great and it is difficult to get out of trouble without help. Debt counselling is a good option if:

• Your fixed costs are structurally higher than your income.
• Your payment arrears continue to mount and your creditors become increasingly strict.
• The stress of financial problems prevents you from running your business properly.

Debt counselling helps you to gain an overview, make payment arrangements and draw up a plan to make your company financially healthy again.

Request help

Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems escalate and take control of your financial future today. Click on the button 'Request debt assistance now' and take the first, important step towards peace and security for you and your company.