Scaling up your business is all about systematically reaching new heights – employing effective business growth strategies to enjoy more money with more free time and more fun (with less stress).
As a Scaling Up success coach helping create cultures that work, it occurs to me that operating a business – and taking that business to higher altitudes of success – is like learning to fly an airplane. This was always a dream of mine, and everything was going well until…
Flying Solo (with Some Critical Help, of Course)
When I was 21 years old, I started my journey to get licensed as a private pilot. After 9 hours of lessons, my instructor said I was ready to fly solo. I remember that day vividly. It was a fall day at a small rural Indiana airport in the middle of corn and bean fields nearly ready for harvest. We had been practicing take-offs and landings. Without warning, my instructor told me to pull the plane over. “You are ready to fly solo. Just let me out, take off, and land safely. You’ll be fine.”
Suddenly, the exhilaration of being a pilot-in-training really took off! In a state of shock, my heart raced as I considered the vast sky awaiting me – alone! After a moment, I swallowed my apprehension, took a deep breath, and took off! At full throttle, I immediately knew something was wrong. The plane was not going fast enough for takeoff and that cornfield was drawing closer and closer. I needed to think fast!
Looking at the instruments indicating the plane’s performance, I suddenly realized my carburetor heat was on and my wing flaps were down. That is the configuration when landing! Quickly, I was able to correct the situation. I turned off the carburetor heat, put the flaps up, and lifted off. With a sigh of relief, I circled the airport and landed safely!
What had gone wrong? I acted as instructed but did not use the tools that would help me take flight. My instructor had failed to say, “Go to the end of the runway, start over, follow your checklist. Be guided by your instruments and you will have a successful solo flight.” Because I failed to follow the checklist and utilize my instruments, my solo flight almost ended with a crash! Luckily, observing the indicators on the plane’s dashboard – and using that information to take corrective action – saved my life!
Taking Off with a Cash Flow Checklist
As an executive coach working with growth firms, cash is the oxygen that fuels growth. Too often, many businesses that are scaling up quickly, can be in danger of running out of cash. Just as flying a plane is safer with a checklist, a cash flow checklist can help your business “take off.”
Also, like the dashboard on the plane gave me precise information about the plane’s poor performance, monitoring your cash position with a cash flow dashboard is essential for great decisions.
It is important for the company’s CEO, COO, and CFO to be on the same page and monitoring the “cash conversion cycle.” The cash conversion cycle is a key performance indicator that measures how long it takes for a dollar spent on anything (rent, utilities, marketing, payroll, etc.) to make its way through the business and back to into your pocket.
Unfortunately, too often when scaling up there is a failure to monitor cash. This leads to constant and disjointed attempts to shore up cash flow. Perhaps Muhammed Asif said it best in a June 9, 2021, Forbes article, Why Cash Flow Management Should Be Your Company’s Top Priority: “The best teams will always have the C-Suite working together, they will all complement each other and be able to have intervention strategies as and when they are required – this will also allow for bold decision making.”
3 Top-Flight Ways to Manage and Optimize Cash Flow
Here are three essential components for monitoring and managing cash flow for optimal results:
- Build your dashboard to get an accurate measurement of profit, business valuation, and cash flow. Visit Cash Flow Story to access empowering cash flow management tools. (My coaching team can schedule generating a complimentary first report.)
- Management/executive leadership teams should set aside an hour or more each month to brainstorm ways to improve the sales cycle, delivery cycle, make/produce/inventory cycle, and/or billing/payment cycle. (For more information and ideas, see the section on “Cash Acceleration Strategies (CASh)” in the book Scaling Up, and use the CASh worksheet available here.
- Report your available cash DAILY with a brief explanation of why it changed in the previous 24 hours. Then chart it against Accounts Receivable and Accounts Payable weekly.
Finally, as Scaling Up author and business growth expert Verne Harnish notes, “Brainstorm ways to improve cash flow at your 90-day planning session. Constantly improving the cash flow of your company – and better understanding how cash moves through the business – is a powerful driver for improving the firm as a whole.”
The Bottom Line:
Are you ready to take your business to new heights and help it soar? Managing and optimizing cash flow are critical. Explore the links in this article to learn more. Then, invest just 4 minutes to complete the Scaling Up Assessment to know where you stand regarding the 4 decisions you must get right when scaling up. And when you are ready to take the next step and put your business on a flight path to greater success, let’s connect
A good place to begin your quest to freedom and effective leadership skills is to take the Scaling Up Assessment.
Take 4 minutes to complete the Scaling Up Assessment to know where you stand concerning the 4 decisions you have to get right when scaling up.
