Things to remember about rapid growth

When it comes to business, some things are intuitive: Find your niche, fill a demand, put in long hours and take measured risks.

Other things require more expertise, like navigating periods of rapid growth in the startup phase. The secret involves the right balance of cash and debt. Companies need to weigh the risks carefully. In some cases, businesses can find themselves increasing revenues significantly while being cash poor.

It happens in a few ways.

In many cases, customers require services or goods well before you get paid. Businesses must account for their own operating expenses until checks start coming through. Some accounts receivable can take weeks, even months to pay up, and businesses need to have enough cash to keep running until that happens. Incurring debt at this stage isn’t always a bad thing, but paying for larger investments (like equipment) with cash can prove dangerous. It’s important for businesses to consider liquidity.

We recommend looking at your cash flow needs in terms of how the funds will be used. But there are no hard and fast rules.

“We have to look at the individual client and see where they are today” says Beverly Holaday-English, a principal at Alban & Company.

Unique situations are why support from a good accounting firm is so critical. Professional services, tailored to meet a specific need, can shepherd a growing company through one of the riskiest stages of business.

During periods of rapid growth, organizations can make financial decisions that either pave the way for future development or stifle prospects for expansion. A qualified CPA can share valuable insight based on years of experience. The right accounting firm will help a business manage both sudden growth and necessary debt.

That’s what Alban & Company does – helps growing Alaska businesses, whatever the needs may be.