Can You Afford to Grow Your Business?
It sounds backwards, but growth is one of the most common ways profitable businesses run out of cash. Before you scale, these are the numbers to check, so the answer is a plan, not a gamble.
Growth feels like the safe choice. More customers, more revenue, more momentum; what could go wrong? Plenty, as it turns out. Expansion consumes cash long before it returns it: you hire, buy, and deliver ahead of getting paid. The businesses that scale successfully aren't the ones that grew fastest. They're the ones that knew their numbers before they stepped on the gas.
1. Your cash runway
Start here. How many months can you operate at today's burn before cash runs tight? Growth shortens that runway before it lengthens it. If you can't answer in a sentence, that's the first thing to build. A 13-week forecast that shows exactly how a growth push moves your cash week by week.
2. The true cost of the next stage
Adding capacity is rarely one line item. A new hire brings payroll, taxes, tools, onboarding time, and a ramp before they're productive. A new location brings deposits, build-out, and months of overhead before it carries itself. Total it honestly; the real number is usually bigger than the obvious one.
3. The gap between selling and getting paid
If you invoice on net-30 or net-60, every new sale funds itself out of your pocket until the customer pays. Scale that up and the gap can swamp you even as the order book looks great. Know your cash conversion cycle before you grow the top line.
4. Your margin at the new scale
More volume doesn't automatically mean more profit. Some costs step up in chunks: a new manager, a bigger space, another truck. Model what margin actually looks like at the new size, not just at today's.
5. Your financing options, lined up early
The best time to arrange a line of credit is before you need it, when the numbers look strong. Walking into a bank mid-crunch is the worst negotiating position there is. If growth will stretch cash, set up the cushion in advance.
The point isn't to slow down
It's to grow with your eyes open. When you can see the cash, the cost, and the margin of the next stage, you can move aggressively and safely, because you've already stress-tested the bet. That's the difference between scaling with confidence and scaling on hope. If you want that picture before your next move, that's exactly the work I do with owners.