Need more cash to grow?

Now that the economy is starting to look-up. Managers will have a new set of challenges. One of the biggest will be finding the operating cash necessary to return the business back to its previous sales volumes.

For most businesses, inventory, wages, utilities, etc. are purchase and paid long before the customer pays for the product or service. The increased business we are looking for will automatically translate into additional inventory, wages, utilities, etc. weeks or months before additional sales income is deposited into the bank.

So where to get cash to fund the growth of my improving business?

The standard response, go to the banker. However, the banker is still reeling from the downturn and the banker is very cautious of risk. Providing you an increased line of credit is tough for them to do even if you stayed current over the last 48 months.

While the bank may be part of the answer, there is more we can do.

Without a doubt, inefficient operations result in wasted materials, time and effort. What inefficient operations really waste is cash. Cash that is absolutely needed to fund additional growth...

Internal improvements can free-up the cash needed for growth.

As a matter of fact, as a banker I may be more inclined to assist you if I knew you were trying to help yourself. Some internal improvement areas that can help reduce waste and in turn free-up cash.

Marketing, track effectiveness, if not generating inquiries/awareness it is not working. Word to the wise, don’t stop marketing, but do get it working. Marketing is still less expensive than door to door sales. It is your message, your geographics, or you demographics. Could be all three.

Sales, create your process, know what is happening and contribute the time. Sales is a verb, maybe a chore but certainly something that has to be done. If done well, it can provide the strategic information needed to transform your business. Listen to the customer. Current customers, past customers, future customers. Knowing their needs will help you be efficient in how your respond. Less expense in keeping a good customer than finding one to replace them. Bad customers are expensive too…..

Order to Cash cycle, in simplest terms the business of your business is to create cash. While we all know that satisfaction, quality, safety, ethics, and the list is long and all play a part. If the business does not create cash it does not exist for long. A poor order to cash cycle will have us slow to invoice, slow to collect, quick to order, slow to pay, lots of unpaid invoices in every area. The time needed to deal with this is a colossal waste. Waste of time, waste of opportunity, waste of talent.

Once have taken steps to improve these areas, now let’s once again ask “Where do I get the cash to fund the growth?”