Tornados – those hypergrowth phases of high sales revenues and low cash flow – can sneak up on you.
You don’t realize one is there until your company is whirling around your ears, and you’re right in the midst of it. That drastic percentage of increase in revenue is what causes a Tornado. The front office goes crazy, while the back office gets more and more lost, trying to figure out what to do with the flood of new business. You look great on paper – you’ve got stacks of contracts signed – but production is lagging and you can see that you’re not going to be able to keep up with this flood of demand for long. That means you’ve got a cash flow problem that’s only going to get bigger, the more demand increases.
So what do you do? On the one hand, you never want to stymie the growth. After all, this kind of boom in business is what you’ve worked toward and hoped for. You don’t want to pull back on the reins, so you say to yourself, “Yee-haw! Let’s ride it out!”
But it’s not that simple. You can’t ignore your back office very long without it having serious effects on your front office. If you don’t do something pretty quickly, you won’t be able to produce the product that’s feeding the Tornado. Without enough of that product, your Tornado will wind down way too soon.
This is where understanding where you’re at in the business cycle can give you a much-needed road map. If you understand that the problem is the backbone—and that that backbone is your IT— then you can pay the necessary attention to IT to make it function correctly. If you understand that the process must be reengineered to fit the new size of the company, you can address that, rather than hiring more people whose salaries will ultimately become unsustainable. When you know what’s happening, you can take the appropriate action.
Safeguard long-term business success with my storm cycle model. Download a free chapter of my book, Surviving the Business Storm Cycle: How to Weather Your Business’s Ups and Downs. Take my complimentary Business Storm Cycle Assessment to empower your people to work better, faster, and smarter.