Providing Sustainability in A Period of Rapid Growth

Rapid growth can be like a two-faced coin – one side presenting the opportunity for sustained success and the other a formula for failure. If the right processes aren’t implemented, which side the coin lands on is indeterminate.

In fact, the coin is slightly weighted toward its negative side if growth allows for imbalances in a company. A study conducted by the Kauffman Foundation showed that over two-thirds of start-ups which experience rapid growth will fail, or at least suffer the longstanding impact of rapid growth over the long term.

This is often because businesses which see an increased demand for their products or services cannot match the cost of supply to the rate of demand. Cash flow has to be meticulously managed and capital streams have to be accessible to keep the business afloat. While most entrepreneurs excel at product selection, service provision, and general business management, their financial acumen is not at the level required to provide their business with its lifeblood – capital.

In 2022, Storage X, a supplier of storage, warehousing, and logistic solutions, experienced a period of unprecedented growth. Their warehousing and logistics divisions required increased capacity to scale to their expanding customer base, but their financial management and processes slowed the rate at which they could make capital available for expansion. This was further compounded by long payment cycles from their large clientele and irregular payments from their short-term customers.

Regular financial solutions could not facilitate Storage X’s needs at scale or over the long term. As a result, they were referred to Express Business Funding. EBF provided a $900,000 Asset-based Loan to fund the improvement of the warehouse premises and upscaling of their fleet, coupled with a $426,000 Invoice Factoring facility to assist with cash flow availability on an ongoing basis.

“We initially elected to work with EBF because they were one of the only Invoice Factoring providers who allowed us to continue to collect outstanding invoices ourselves. We pride ourselves on our customer relationships, and felt that allowing a third party to conduct our receivables collection would impact the relationships we’d worked incredibly hard to build,” says Liam Billson, Owner and MD of Storage X.

“We had no idea how much we needed help with our finances. When EBF conducted their initial analysis of our business, they not only pointed out where we could improve but also helped to implement the suggested changes so that we could maximize our rate of growth. They allowed us to focus on what we do best, while they did what they do best,” continues Billson.

These specialized solutions have allowed Storage X to maintain their rate of growth sustainably. The effective financial and administrative processes implemented under the guidance of the EBF team have also allowed the company to isolate shortfalls and prevent unnecessary expenditures.

“Be prepared for higher-interest rates [in comparison to traditional finance], but also be prepared to learn, grow, and see your business flourish if you’re willing to work alongside EBF,” concludes Billson.

If your business is experiencing unsupported rapid growth, we urge you to get in touch with our experienced Business Development Team today and empower your business with sustainability that matches its trajectory.