Devoted to Managers and those that seek to improve their management skills

There have been a lot of disaster stories for businesses that have been growing at a steady pace suddenly landing a big, unexpected deal that is considered a fantastic opportunity to bring the business to the next level. The problem is that the vast majority of businesses don't have plans in place to manage the possibility that something big comes along.

The street.com has a good story telling of this very thing.

The owners of a small business doing around $20,000 a month in sales, suddenly landed a big contract to install Internet facilities in a corporate campus office.

With the business entailing two partners, they both got to work on delivering on their promises and to ensure that with their fulfilling of the job, it would take their business to the next level. This part of the process they performed very well.

After about two months, the partners believed that they had made the transition and had achieved the level they had seen moving to. With everything seeming to be great, they celebrated by going out and leasing two Mercedes sedans from a local car dealer.

So what could possibly go wrong then?

There was no plan in place to anticpate unplanned growth. There was no concept of the consequences that could come about through cash-flow problems. Other than performing their job great, there was no thought about the need for anything else. The reality hit them hard when they suddenly realized that they had run out of money.

They never had to come up with the kind of money in the past because they didn't take steps like hiring several new employees that now needed to be paid. It seems they never had to deal with a company of this size that is in no hurry to make payments or have vendors as their priority.

Not only that, but the partners mentioned also didn't have the invoicing process on their side of the business in order as well. They had been slow in processing the invoices because they focused on doing a great job for their clients. Sounds good, but it's tunnel vision. The truth is that all the pieces should be in place and operating at one time.

What needs to be done by any business leader or manager is to have a plan in place that takes into account the consequences of a surge in business. There are more variables involved than is normally thought, as these business owners found out.

This is not uncommon among businesses, as I mentioned. It's impossible to cover all contingencies as there are so many types of businesses that require different strategies.

But on the business side of it, there should be a standing credit line with your bank on receivables that can cover you when something like this happens. That way the potential to hurt a strong business relationship won't come about because of poor planning and then the possible pressuring of the client to pay.

Second, whether it's a small or large business, I've seen this celebration thing before when someone comes into some unexpected windfall that they aren't prepared to handle. In this case when you see the leasing of the Mercedes, along with the relatively small monthly revenue coming in, it was a huge mistake.

That's also a response that comes from poor or no planning. With a strategy in place, it would or at least should have put checks and balances in place that kept the owners disiplined and not doing the celebration thing prematurely.

In my experience, I've seen business after business that were cash cows actually go under based upon not managing growth or having a plan in place that can anticipate the potential fallout from it. We need to act like at any time a huge order or a lot of business will come to us and be ready for that time. Not doing it could destroy or injure your firm.

One other simple strategy? Just say no to business you're not sure you can handle.