Identifying inputs to create sustainable growth strategies
Very few business owners actually ask themselves this question. Admittedly, it seems a rather odd question to ask because as we all know, growth is good for a business. Right?
So, you go ahead and execute your growth strategy and you start to see the top line revenue numbers are growing, but the same can't be said for the bank balance. It may even be going backwards. That can’t be right?
It is because the business owner hasn't asked that rather odd question. They haven't taken the time or sought the advice to quantify their Sustainable Growth Equation ('SGE'). Your SGE shows what cash will be available or required from generating an additional $100 of revenue.
What if, before executing your growth strategy you knew that for every extra $100 in sales it would actually require you to fund $50 in working capital with either cash or debt? Would you go through all that hard work to find and generate those extra sales or spend the time to examine and understand your SGE so you can guarantee that every extra dollar of sales more than funds itself, it generates growth?
I don’t doubt the premise that businesses need to grow not only to just survive but also to flourish and generate wealth for its owners, but I know many businesses are not ready to. Generating sustained growth is hard work so you want to make it count.
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