• Lee Milward

Is Your Business GROWING Broke?

Updated: Aug 21, 2021


Even though your business is growing, and your turnover is more than ever before… Your bank balance tells another story.


The number 1 reason for growing small businesses to fail is that they run out of cash!


It’s not because they have poor products or services – most were previously very successful and profitable. It’s because they don’t understand the cash conversion cycle and when a business wants to grow and scale it requires a lot of cash!

 

Growth Sucks Cash Big time!

Once you understand what your cash conversion cycle is (in days), you can reduce it and grow the business at a sustainable rate.


The problem areas below result in a company not generating enough GROSS MARGIN DOLLARS and CASHFLOW to fund the growth of the business and scale-up.

  • Don't understand what the numbers are telling you.

  • Product or service pricing and mix are not set to the optimum level.

  • Customers take too long to pay, suppliers require payment upfront - stretching your cash cycle.

  • Too much debt.

  • Poor labour efficiency and utilisation.

  • Accounting systems are not set up correctly to provide the right information to make better business decisions.

 

The Solution

  • Keep It Simple

  • Keep Growing

  • Grow Profitability

You can take action by implementing the 7 Financial Levers below to increase your cash flow and reduce your cash conversion cycle days. Start with the easiest one first!

  1. Increase your prices.

  2. Increase your sales volume.

  3. Reduce your Cost Of Goods Sold (COGS).

  4. Reduce your overheads.

  5. Reduce your debtor days.

  6. Reduce your stock days.

  7. Increase your creditor days.





26 views0 comments

Recent Posts

See All