Growth and Cash Flow
Since small businesses account for almost half of US jobs, their growth is critical to the US economy, yet 2 in 3 fail within 2 years, only half will survive 5 years, and 1 in 3 will last 10 years.
Why do they fail?
For the majority, it is because of cash flow problems.
You may have experienced inconsistent or lack of cash flow yourself at some point in your business. What can you do about it?
“There are two obvious solutions that result in cash flow injections: cutting expenses and growth.”
But the irony is that while growth generates cash flow, it is at the same time, a cash drain. Growth and cash flow present a catch-22 for most business.
So…
Growth generates more cash.
and…
Growth costs more money.
How then, do you generate more working capital, more cash flow to make growth a reality?
Better systems.
Not just better systems in general because all businesses should have working systems set up.
Better systems built around growth: organic and planned.
Working, repeatable systems save you money and pave the way for generating income and generating wealth.
Therefore, business owners need to have systems built with those two objectives in mind.
Systems and Organic Growth
Can you thinks of times when organic growth occurred in your business?
Maybe during your upcoming year planning session, your end-or-year reports revealed areas of opportunity in your business.
For example, you tallied the numbers for all of your various income streams and activities. When you looked at the numbers for each area, you could see which activities yielded the most revenue and which, the least. You could also see what activities would benefit your business the most as a focus.
Perhaps you set a goal of adding one new 1:1 client to your most expensive, most in-depth services. Or, instead you set a goal of adding 10 to a less expensive, less involved service to meet you new income goals for the upcoming year, or both.
Either way, new systems or adjustments to existing systems are necessary to achieving your income goals.
Once you have them in place, and then follow through with the process without fail, you’ll meet your objectives. Consistency rules.
Growth will happen.
Your cash flow will increase.
This kind of growth comes about organically through just doing business and reveals itself during the process of looking at the data of where your business is at a given moment in time, what your observation tells you, then developing the related systems.
Possibly in your reflection, you also discovered existing systems in your business that needed some work that will result in more consistency or smoother implementation.
Maybe your social media posting wasn’t regular throughout the previous year because it was what you gave the least amount of attention to, saving it for last, and when your head was to the ground for long periods of time, you just couldn’t get to it.
So, you have to build a system around it to make sure it happens whether you are busy or not.
Another example…
You could have an existing system in place, a financial system.
It works okay, but it doesn’t provide you with the support, accuracy, cost savings, or time savings that you want and need in your business.
Organic systems growth in this area would mean studying that system with a view to how you can improve that system, making it work better for you, then adjusting your processes in line with what you discover.
Growth will happen.
Your cash flow will increase.
Systems and Planned Growth
Planned growth and organic growth often seem similar.
They are similar and often work hand-in-hand together.
They can work separately, too.
Say you have a amateur-looking website that does not represent you or your business at all nor the quality of the product or service that your provide.
You know that updating that website or building a new one is key to increasing revenue (cash flow) and attracting your ideal client.
Building a new website presents some dilemmas for you as business owner.
- It’s a large expense.
- It will take time.
- You’ll need to hire someone to build it.
Therefore, planned growth is required.
- You’ll need to plan for the revenue to pay for all the components of the site itself.
- You’ll need to plan for how long you want it to take. You’ll need to plan for the revenue to pay for the contractor to build the site.
- And you’ll need to plan for finding the right person to do it
The result of all this, once implemented, will be planned growth for your business.
Another example is building your team.
You know you want to create time for yourself by delegating some of the day-to-day operations. Hiring a virtual assistant will cost money, so you’ll have to look at your budget, and plan for the expense, but it will also require you to look at and decide what exactly what you want to hand off to your new VA.
When you decide what you want to delegate you’ll need to build step-by-step systems around each task.
Growth will happen.
Cash flow will increase.
How can you implement organic and planned growth in your business?
Since growth and the resulting working cash flow are keys to a sustainable business, making it happen is a goal, right?
Below are 5 steps you can take to experience organic and planned growth in your business.
- Plan, plan, plan! – Do your end-of-year planning every year for the upcoming year. Review and reflect on all areas of your business, but take a detailed look at your income and expenses. These two areas always show organic growth opportunities that you can build new or update existing systems around.
- Record your systems. – Record all of your business systems and processes whether new or existing, step-by-step.
- Build templates around your systems and processes. – To manage your systems and your team, it is fundamental for your success (and theirs!) to build your systems and process in a project management platform. Then use it. It will save you time and money.
- Develop your goals and outcomes around your systems. – Ideally, if you can plan the related tasks out for the year, marvelous! But in reality you may only have time to build them out for the quarter. Once you have quarterly goals and outcomes recorded, then break them down to monthly and weekly tasks.
- Review! – Planning, setting goals, and developing tasks is not a once and done kind of activity in your business. Why? Because life happens. Business changes. You need to revisit your goals and activities at the end of each month. Check off what’s been done, what hasn’t and needs to be rescheduled, and what has changed in your business. Doing this is critical to accomplishing your goals and reaching the outcomes you desire.
Organic and planned growth are the building blocks of your business and your working cash flow. They are a necessary part of the day-to-day operations that result in a successful and sustainable business for both the short- and long-term.
If you’d like to talk in more detail about how I can help you identify organic growth opportunities or develop planned growth areas in your business, schedule a FREE Discovery Session here.
If you missed the first blog post in the 5-part series on systems, read it here.
Are you the DIY type? Get your FREE planning checklist now.
