Be Careful Not to Grow Too Fast

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Be Careful Not to Grow Too Fast

Encourager-In-Chief: July 12th, 2017

Growing too fast can be as bad as growing too slow.

All new entrepreneurs are eager to grow. The fear of not having any money coming through the doors is overwhelming and causes insomnia--the likes of which you may have never experienced before. Yet, while not having enough business is a serious concern, having too much business can be just as dangerous.

For example, let’s say you run a staffing company. The staffing company must pay all of the temporary employees who work on a project within one week of the assignment. However, the customer doesn’t usually pay the staffing company’s invoice until about 30 days later. That’s assuming it’s a conscientious customer who has adequate cash flow.

The reality is the staffing company will be lucky if it receives the money in less than 60 days from the date of the invoice. Were that not enough, what if your client customer is waiting to get paid by its own customer who is also delinquent in its payments. Now we may be looking at 90 days before any money starts coming in. Imagine if you were staffing this project for six months. It’s easy to see how your company could quickly get into a financial straitjacket in a relatively short period of time when it’s forced to lay out money faster than it’s coming in.

Even with the line of credit, you could quickly reach your maximum limit before you see any financial relief from your customers.

It’s important that you invoice your customers in advance, even partially, on substantial jobs that will dry up your cash flow. The alternative is to find yourself quickly out of business before you even realize what happened to you.

The key to an entrepreneur is affordable steps.
- Daymond John

This excerpt is taken from my Increasing Cash Flow, Sales, and Profits seminar.

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I also encourage you to register for my Survive and Thrive III: Increasing Cash Flow, Sales, and Profits 12 day drip program.

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