The financial reports for companies going through growing pains will likely reveal line items that are higher than necessary. Possibly the Cost of Goods sold is much too high, eating away all of your profits. At the end of the day, while there are numerous possibilities as far as what the problems could be, issues on this point almost always boil down to something being out of alignment, causing items in the budget to balloon.
Most likely, a financial analysis will help in this capacity in four distinct ways. Those aspects are as follows:
New Vendors Required: It is quite possible that one or several of your vendors are costing you money, therefore ballooning your budget. In this case, your team should analyze and determine which vendors are the culprits and rebid the contracts. One side not here: never take a bid with an unreliable vendor even if they are substantially lower than everyone else. You will thank me one day.
Missing Roles: It is possible that you really need to create new roles to help address the problems. Even though it is an expense, at the end of the day, creating a role in an attempt to fix a vexing problem that is causing system breakdowns will result in a cost savings.
Roles Need to Be Departments: You might have such a large load of work that one person cannot simply handle the demand. In fact, it is possible that you may need to hire more than one.
Roles Need to Be Combined: A scenario that is never fun to experience is this one. You discover that there are people in your company who have a job that is not productive enough to keep. Therefore, it needs to be either combined with another or should be eliminated altogether. A great scenario would arise if you could transfer a person to a completely different role and retrain them so you can keep them. Unfortunately, that doesn’t always happen.
Having this work done should be done by your finance team. In the Scaling article published two weeks ago, an outline of what your finance team might look like was given. Please refer to that at this time.
If you have looked at that list and noticed that your company does not have several of those roles, it is quite possible that is why these issues were missed. Another situation that could explain a potential miss here is that some of these roles really should be teams or possibly entire departments, and that the people that are doing the work right now simply do not have the capacity or the bandwidth to keep up. A less pleasant reason is poor management within your finance team that resulted in this situation.
In conclusion, working through growing pains by studying the financials is a very painful and difficult process. It could be one that is not at all fun, especially since it tells a very ugly story. However, once you have managed to get to the bottom of everything and see what is going on, the nice part is that you will be able to quickly identify what needs to be done to fix these problems. Since financials are hard data that requires hard skills to both handle and interpret, you will be given some very valuable insights as to what changes need to be made with your company.