How could I be growing…going broke? My business is profitable. Often business owners are not looking at the right set of numbers that are important let alone at the right time. There is a saying “revenue is vanity, profit is sanity and cash-flow is king”. Often business owners don’t know what the right numbers are.
As your business grows so does the complexity and speed. Growth can easily suck cash from your business, costs rise, your working capital needs can grow, the speed of cash moving through your business can slow down. It feels like it happened overnight, in reality it was a slow moving train wreck.
Mistakes increase, all the cycles in your business get longer, your profitability slides and before you know it even though your revenue looks good, and profit looks alright, you have no cash and the value in your business has declined. Your balance sheet has been hollowed out.
The key is to go beyond the financials as historical documents. Get real time information. Know which numbers you need to be looking at so you can drive the combination of profitability, cash-flow and performance, and build and capture value in your business.
Go beyond big picture, look under the hood at the real drivers of your business and sustainable growth. You need to know which numbers you look at daily, weekly, monthly, quarterly and annually. Growth does not happen simply or by chance. It is something you need to design and stay close to.