Keep your business from growing into a crisis.

Business is booming and even though profit margins are shrinking and customer service is beginning to fall behind, the business is making more money than ever. It seems new workers and managers are added every day to sustain the growth. Everyone is working 16-hour days to keep up with the ever-increasing demands of customers, and all operations are exceeding capacity. Those same banks and equipment lenders who never returned calls last year are now lining up with more and more cheap money to finance this growth spurt. The business has never been more successful. Life is good!

Most business owners don't realize it, but at this point the business has also never been more vulnerable to failure.

But isn't this what everyone has been working these past several years for ... to get to this point? Isn't growth good and rapid growth better? Yes and no. Explosive revenue growth is not always a benchmark of success. The feeling of exhilaration from the growth spurt may actually mask the warning signals of a looming disaster. This same growth has the potential to overwhelm management, causing it to lose focus or misdirect efforts and resources. Rapid growth can often masquerade as success and hide the symptoms that can mark the beginning of the end.

Crisis managers and turnaround professionals are experienced at recognizing and resolving such potentially disastrous problems. Real-life business scenarios show time and time again, that rapid growth often causes a competent management team to lose control. Unfortunately too often, by the time crisis managers are brought in to solve the problems, the opportunity for the business to be successful has dissolved.

Crisis managers are able to successfully navigate the transition of the business during these times of positive stress. Managers often fail to realize that the same skills needed to manage a business during a crisis or a turnaround are exactly the same as those needed to handle the impacts of rapid growth.

The parallels between crisis and growth are striking. For different reasons, both make huge demands on the human and financial capital of a business. During a crisis a business uses cash to hold onto its business. During periods of rapid growth it uses cash to finance its expansion. Employees and equipment need to be more efficient during times of rapid growth as well as during times of financial crisis. Most importantly, rapid growth and a financial crisis make substantial demands on management that can distract them from executing their core business.

Rapid growth and crisis are also both traumas that attack the stability of the systems of a business. Management needs to recognize that these demands are short-term and know that if properly handled, they can be resolved with positive results. Rather than have rapid growth strain the business, management may be wise to retain the services of an outside team of professionals who are dedicated to solving the problems created by such growth without distracting management from its day-to-day responsibilities.

Management, distracted by rapid growth, begins to compromise or even sacrifice many of the business disciplines employed to make the business successful in the first place. It has become so focused on delivering on the promise of the business, and management talent is spread so thin that something inevitably will fall through the cracks. That something often ends up being the business. Yet frequently, a disaster scenario caused by rapid growth could have easily been avoided had it been recognized and managed sooner.

Businesses fail everyday for myriad reasons. Many of these reasons are as fundamental as being undercapitalized or lacking a clear business strategy or failing to assemble a strong management team. There are five situations that can signal when rapid growth is potentially driving a business to a crisis. These are:

* Profit margins: Making less of a profit margin on increasing revenue is often an indication that operating controls are strained or not working at all.

* Overtime: Labor-intensive businesses run the risk of losing control of costs once it falls into the trap of using overtime to keep up with demand.

* Capital planning: All businesses love new equipment and new facilities but too often interpret a growth spurt as a long-term trend and miss-apply its long-term capital to solve short-term problems.

* Cash flow: Rapidly growing accounts receivable, increased overtime, swelling accounts payable, and new equipment and/or facility lease payments all converge on cash flow and the result maybe a pending cash crisis.

* Customer dissatisfaction: The business experiences a quantum leap in customer complaints about delays in delivery or the quality of the product.

When a management team is swamped just trying to keep up with running the business, it can often miss any or all of these signals. Many businesses fail due to management's inability to recognize these signs and adapt to meet them.

A viable solution is to retain the services of a temporary management team dedicated to transitioning the business through such periods of rapid growth. Crisis management and turnaround firms are experts at managing such traumas in conjunction with management. In fact, the relationship will create a stronger core management team for the long-term health of the company. By engaging an unbiased outside third party, the business can potentially accomplish three primary goals: (a) assure that such rapid growth will not cause the downfall of the business; (b) successfully coordinate the integration of such spurts of rapid growth into the overall long-term strategic goals of the business; (c) maximize profits from such rapid growth.

Not every business is driven to failure by rapid growth. But unfortunately a good number are, and in almost every instance the failure was avoidable if the pitfalls had been timely recognized and managed.

The same skills and talents that crisis managers and turnaround professionals exhibit in rescuing a business could just as easily be employed by management to prevent a crisis from occurring. It is the same premise as visiting a doctor for a check-up rather than waiting until something has gone terribly wrong and finding that major surgery is required.

Is the business growing by leaps and bounds but feeling a little out of sorts? Maybe a visit by the crisis doctor to run some tests and diagnose the symptoms is in order. A little prevention may avoid the trauma of major business surgery before it becomes an irreversible certainty.

Christopher A. Wheeler is Managing Director and Director of Special Industries for Ballenger, Cleveland & Issa, LLC ("BCI"). For more information, visit www.bcillc.com.