Strategic Discipline Blog

“Growth Sucks Cash!”

Alan Miltz reminds business owners, “Revenue is Vanity, Profit is Sanity, but Cash is King!”

Early in my career as a manager of two start-up radio stations I learned how important both statements are. My first start-up was as a manager. Despite our business growth exceeding our expectations, we’d have to ask our parent station for additional cash every month. We couldn’t keep up no matter how fast our revenue grew.

When I became the part owner of a startup radio station, one of the first things one of the partners and I did was to forecast revenues and t cash flow. We had to know how much money to ask from the bank to finance us. It was probably the most important piece we put into place before making our loan request. I learned the lesson of cash flow in my previous stint as a manager. That foresight helped us to obtain the loan and meet and exceed our financial commitments to the bank and our shareholders.

As an E-Myth business coach cash forecasting was too frequently the demise of most small business owners.

First in Scaling Up, and then with Metronomics, our tools help you to get cash faster and forecast your cash to grow your business.

The CASH System

The Cash System is simple: forecast cash first. You need to forecast how much cash you want in the bank at the end of every month, month over month, for thirty-six months. This is a system owned by your whole leadership team, not just your financial team.

The process is to forecast cash first and then the widgets, the non-fiscal things in your business that your team controls. What are widgets you say, Doug? Widgets are the key element of your business. This is your profit per X unit that drives your business. Focusing on widgets helps you to put each team member into ownership and control of their output. A widget translates into dollars. Dollars often seem more difficult to control. When you build your KFFM, your Key Function Flow Map, you discover how cash flows through your business, and what the critical unit, or widget, is that drives your business growth.

By identifying it you gain more control and confidence in what you can produce thereby gaining more control over your cash.

The cash system requires work, it also requires you to know your business and what elements drive cash through it. Each element in the KFFM can heed or hinder this. Knowing your Key Function Flow Map gives you a high-level view of how the business is working, and where the bottlenecks are.

Additional tools to improve cash flow are included in these blogs:

Cash Conversion Cycle – Oxygen You Didn't Know You Had

Your Organization’s Most Important Resource

POWER OF ONE (1%): 7 KEY FINANCIAL VARIABLES YOU CAN INFLUENCE

Customer Funded Business – John Mullins Dallas Growth Summit

Cash – Fundability Optimization & Increasing Equity

Cash – How Fast Can Your Company Afford to Grow?

In The “M” Game Dave Myers CEO of Apex Leaders provides a vivid testimony of how the Cash System helped his business grow. He provides a detailed account of how this system integrated with the other soft and hard systems helped him to grow, develop more accountability, and put him in the position he loves of working on the business. You can read more of his story by downloading his testimonial.

Need help generating more cash for your business? Contact me today to learn more about how we can help.

Create an amazing work environment to fuel your growth!

Discover what level your team is functioning. Take The M Game Growth Check (scoreapp.com).

To create an environment where everyone is inspired to give their best, contact Positioning Systems today to schedule a free exploratory meeting.

Growth demands Strategic Discipline.

Shannon dedicates Part 3 of The “M” Game to Results. There’s a lot going on to achieve success, and there’s one final system that drives results. Your team and company only grow as fast as your leaders. The Coach Cascade System takes your leader's and team's behavior to the next level. Next blog we explore the Coach Cascade System.

Building an enduring great organization requires disciplined people, disciplined thought, disciplined action, superior results, producing a distinctive impact on the world.

Discipline sustains momentum, over a long period of time, laying the foundations for lasting endurance.

A winning habit starts with 3 Strategic Disciplines: Priority, Metrics, and Meeting Rhythms.   Forecasting, accountability, individual, and team performance improve dramatically.

Meeting Rhythms achieve a disciplined focus on performance metrics to drive growth.

Let Positioning Systems help your business achieve these outcomes on the Four most Important Decisions your business faces:

Positioning Systems helps mid-sized ($5M - $500M+) businesses Scale-UP. We align your business to focus on Your One Thing! Contact dwick@positioningsystems.com to Scale Up your business! Take our Four Decisions Needs Assessment to discover how your business measures against other Scaled Up companies. We’ll contact you.

NEXT BLOG – The “M” Game – The Coach Cascade System