Join Jim Stice for an in-depth discussion in this video Growth, part of Finance Essentials for Small Business.
- Now to our last topic uncontrolled growth.…Growth is awesome, increased market share is good,…sales trending upward is the dream,…and unmanaged growth has killed a lot of companies.…Growth must be carefully done…or it could be fatal to your business.…The reason being is that growth often requires cash,…and cash is often the one thing…that new businesses do not have a lot of.…In fact, a lot of new business owners when faced with the…cash flow issues associated with starting a new business,…they mistakenly think that the solution…to their cash flow problems is to grow faster,…not realizing that the fast growth is causing…the cash flow problem in the first place.…
In other words, they hit the gas…when they should hit the brake.…How does growth cause cash flow problems?…Well think about it, in a typical business…that is selling a product to a customer on credit,…that is the customer will pay in say 30 days,…you as the business owner need to pay your rent,…pay your insurance, pay your employees,…pay for the inventory, then sell that inventory,…
- Describe the most common reason small businesses fail.
- Identify two reasons why your business plan needs to budget cash inflows and outflows for the first six months of your business’s operation.
- Write the formula to forecast cash flow for the first four months of your small business.
- Explain the first step you should take if your new small business is not making the profit you anticipated.
- Identify the most important thing to keep in mind if you are considering faster growth for your small business.