Igniting Velocity: From Volatility to Scalable Growth

We are always reminding our entrepreneurial clients to focus on what they can control. Easier said than done. Business owners tend to overcompensate when it comes to being in control, and fixate on what is outside of their control, resulting in no traction for the business. External volatilities (economy, regulation, supply chains, increased competition, etc.) often get the headspace and the focus. Internal volatilities can be more undermining, limiting growth or the ability to scale at all. 

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This BizGrowth 5.0 gives you bonus insights into seven internal volatilities that can derail a company’s best intentions and ability to scale. Internal volatilities are the fluctuations and inconsistencies that come from within the business itself. In most cases, taking charge and driving solutions to address these volatilities is all that is needed.  These include cash flow instability, reactive leadership, talent turnover, operational inconsistency, customer relationship risk, overextension of resources, and founder burnout. 

1. Cash Flow Instability: Inconsistent billing, delayed collections, and poor financial controls create unpredictable liquidity and stressful business management when payroll needs to be met, and vendors need to be paid. Processes around payment terms, collection, and invoicing frequency and accuracy can mitigate delays. Should deposits be expected before work begins? This is especially important when work is labor intensive. Over-reliance on one or two big customers also makes revenue swings more volatile.

​Add to this contract-based payment terms that extend into the 60-day or 90-day timeframe, and your business becomes more and more at the mercy of this customer in what it can and cannot undertake due to cashflow, especially at the beginning of the contract. 

This is where financial cushions are critical. Entrepreneurs often focus on growth, but neglect building cash reserves that can be a stopgap when needed, such as the case of the great contract with 60-90-day payment terms. Our research has confirmed that best practices are to have between 9-12 months of operating expenses in reserve, despite the mainstream stating three months is sufficient. It is not sufficient. We need only refer back to the impacts of business shutdowns during COVID to be reminded of the importance of a cash reserve.

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Bottom Line Rule #22
Strive for 9 - 12 months of 
operating expenses in reserve.
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2. Reactive Leadership: Entrepreneurs tend to pivot quickly, and this agility can be a value-added advantage against bigger competitors. However, agility should be strategy based and not reactively based. Frequent shifts in strategy, customers and priorities create confusion for employees and customers and may feel more like a constant reinvention of the wheel. ​When leadership is constantly chasing the latest business management fads it comes across as indecisive and lacking a strategic foundation. 

When there is no clear commitment to a direction, enhancing deliverables and raising the bar of excellence, opportunities are not identified and there can be no momentum.  Being over-involved in day-to-day details as a leader or founder can inhibit team members from doing their best work, slowing scalability, and limiting capacity. Lack of clear job roles and responsibilities can also limit delegation from leaders to team members and team members to one another, leading to bottlenecks and reactive rather than proactive decision-making.

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Bottom Line Rule #14
Strategy brings clarity. 
Clarity ignites results. 

3. Talent Turnover & Culture: Small teams are highly vulnerable when one person leaves or underperforms. When turnover is high, the team dynamic is always in flux. A lack of formal onboarding, unclear roles, protocols for performance improvement, and culture misalignment creates instability and confusion even before the team can gel. Entrepreneurs too often hire quickly for growth but don’t manage engagement and performance well, leading to team member burnout and attrition. 

What leaders need to understand is that when anyone starts working in their company, they are not engaged, but they are hopeful. In those first 90 days that you are assessing if they are going to be a valuable contributor, that team member is assessing if they have made the best decision for their career and their life. A focus on engagement with each team member to feel like a valuable contributor to the company at the onset will incite them to become a valuable contributor in the company. 

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Bottom Line Rule #32
On day one,  an employee is hopeful, not engaged.
What you do from day one matters most. 

4. Operational Inconsistency: Processes that exist “in the founder’s head” or aren’t documented effectively cause volatility in delivery and quality. Team members are then working based on their own assumptions instead of clear guidance and direction. Lack of systems for sales, customer service, or fulfillment means performance depends on who’s available that day. Technology not being leveraged fully or impactfully creates a void in automating the business. 

​Time is not being used efficiently to free up space for hands-on engagement, innovation and problem solving. Putting out fires becomes a daily norm instead of elevating team members’ ability to be proactive and effective.  Entrepreneurs often scale revenue faster than operations, creating growing pains. These growing pains can cause quality deficiencies, unclear roles and responsibilities, duplication of efforts, and overpromising and underdelivering. Instead of trying to catch up to revenue after it is realized with reactive hiring, customer complaint management, and damage control, having a strategic growth plan that anticipates scalable operational needs coupled with clear systems and protocols ensures your growth has momentum. 

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Bottom Line Rule #13
Ignoring what isn't working is
more costly than facing it.
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5. Customer Relationship Risk: Depending on a few clients or one distribution channel magnifies volatility if any of them change terms or leave. No client should represent more than 20% of your overall gross sales, and less than 15% is what should be your ideal. A business whose largest client is more than 75% of its revenue is not a business but a single source contractor representing a huge stability risk. While a multi-year contract can give a false sense of security, poor client management and team engagement or lack of diversification create revenue shocks.

Internal failure to measure customer or team member satisfaction and loyalty allows churn to sneak up. Depending on a single industry source of revenue, unless you have carved out a niche with strategic brilliance, can cause internal volatility if the industry is impacted as a whole. If new laws, tariffs, or restrictions hit the industry, your business is disproportionately exposed. Like the stock market, entire business fortunes rise and fall with industry health. Relying too heavily on a single industry can blindside companies to cross-industry opportunities or disruptive trends emerging elsewhere.

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Bottom Line Rule #31
No single customer should be more
than 15% of your gross revenue.
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6. Overextension of Resources: Effective scalable growth requires an ongoing proactive focus on capacity building. Chasing too many opportunities (new products, markets, partnerships) spreads the business too thin. Lack of prioritization leads to unfinished projects and wasted momentum, which then negatively impacts morale and team engagement. Limited staff and capital can’t sustain the same pace for long. Capacity building requires an astute understanding of how to effectively leverage time, people, technology and money for greatest scalable impact.

​When a business’ current resources are stretched and resources are not being leveraged fully, quality begins to suffer on all fronts. Having the right people with the right skills doing the right job requires anticipating roles today and how they will need to evolve tomorrow. Identifying how technology can simplify delivery of services, free up manual time for more value-added skill focuses, and integrate across the entire operations sets a business up for growth. 

After we helped an engineering firm back into their desired double-digit sales growth numbers by identifying all capacity areas that would be affected by each increment of growth, their employee turnover decreased, profit significantly increased, client satisfaction resulted in extended contracts, and overall morale in delivering their services also increased. 

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Bottom Line Rule #23
Build capacity through effectively leveraging
time, people and technology.
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7. Mindset & Founder Burnout: Entrepreneurs’ personal resilience, confidence, and energy directly affect the business. As the founder and leader, you set the tone for the entire team. If you are stressed or exhausted, it shows up in a multitude of subtle ways that you may not be aware are telling everyone there is something to be worried about. Volatility in the founder’s health, focus, or motivation can ripple across the company. Unexpected events in a business owner’s personal life that cause a distraction from the business can leave people feeling lost or clueless if systems are not in place to guide and direct them. 
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​Micromanaging instead of building a leadership bench keeps the business from stabilizing and scaling. While incremental growth may be happening, there will come a point where your business has hit its ceiling of growth because it can no longer be managed solely by just you as the owner. 
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Growing leaders in a smaller enterprise starts by giving key people more and more responsibilities with oversight and guidance. Holding onto too many of the reigns in a growing business not only limits its ability to grow even more but also causes owner burnout. A need to have your hands in everything in the company leaves no down time or ability to escape, release and relax. Instead of enjoying your own business you start not to enjoy the business at all and start to question if it is really worth all that it is taking out of you. 

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​Addressing these internal volatilities will set you up for realizing a High Velocity Quotient (VQ) in your business. In our Economic Vitality® Model, the key to having a high VQ is in embracing what it takes to realize a high Intelligence Quotient (IQ) strategically and high Emotional Quotient (EQ) culturally. Read my Forbes articles on each of these by clicking on the hyperlinks. 
In conclusion, if you are frustrated by what feels like stagnant, feast or famine, or small incremental growth, consider how these seven internal volatilities may be showing up in your business. As an added reference, review this Internal Volatility Checklist as a starting point to prioritize where you need to focus first. 
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Yours in economic vitality,

P.S. Want to read more about the Velocity Quotient? Read my Forbes.com article entitled, “Velocity Quotient: Empowering Agility & Growth”! 

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​Sherré L. DeMao, CGS is author of Dream Wide Awake, 50 Secrets of Growth Companies in Down Economic Times, and Me, Myself & Inc. – a Synergized World, An Energized Business, Living Your Ultimate Life, and the CEO/founder of BizGrowth Inc. an award-winning next-level strategy, training, and intellectual property development firm based in Denver, NC, serving clients across the United States. As a Forbes Council expert and thought leader since 2022, her blog seeks to help entrepreneurs build businesses with economic value, worth and preference in their industries and marketplaces.