Cash

Any journey takes an amount of cash, and the further you want to go the more cash it takes to get there. It is not a coincidence in the old saying that Revenue is vanity – Profit is sanity – and Cash is king.

The first law of entrepreneurial growth is that “Growth Sucks Cash” and if you are already a growing business you will know it has taken a lot of cash to fund your growth this far. Going outside the business for growth capital is a time consuming and expensive business way of generating additional cash. Before you think about going externally to raise growth funds, there can be lots of cash that can be freed up from your existing operations.

It is important to recognised that cash is a by-product of doing lots of other things in the business well. There are lots of non-accounting actions that a business can take that will have a positive influence of a company’s cash position. For example, having a clearly defined strategy you will be focusing on your areas of expertise where you can make the best return for your time, effort and expertise, when coupled with doing things right the first time and eliminating costly operational mistakes cash improves significantly.

The key question is where to look first and to find out if you need to worry about cash to fund your growth and expansion, ask yourself the following questions?

  • Are you generating a consistent level of profitability from sales to fund your growth

  • Do you have access to funds to fuel the development and growth of the business