Posts by Brad Martyn, Managing Director, Focus CFO:
Revenue Growth Isn’t Always The Solution
Have you ever been white water rafting? When the water is high, you glide effortlessly through the river, expertly navigating the bends and slicing through the current – it’s exhilarating. Flash forward a few months later, after the water level has dropped, and it’s a completely different story. Where it was once smooth sailing, you are now confronted with a scattering of rocks, boulders, logs and branches. Your ability to progress through the course takes a hit.
Your revenue is like the water level in this example. When it’s high, it hides a lot; but when it’s low, problems begin to reveal themselves. Unfortunately, some business owners believe that the best way to fix their business is by adding revenue. What they don’t realize is that this tactic is simply masking the real problem.
Sometimes, More Is Less
If you want your business to be healthier, you can’t rely on revenue growth to solve your problems. In fact, you may find greater success if you start thinking small.
Businesses that are healthy tend to be able to generate healthy cash flow. This means that you need to pay attention to more than just your ability to generate revenue. For example, you could find great success if you were to tighten up your billing strategy. Oftentimes, business owners will only focus on their monthly revenue and forget to consider how long it actually takes for the money to roll in. Even though your company’s revenue looks great for the month of July, it could be September (or later) before you actually get paid. In the meantime, you are stuck playing the waiting game.
Instead of looking for more customers to cover the difference, start thinking small. Get rid of the extra baggage that’s holding you down. Revenue doesn’t mean a whole lot unless you have the cash to back it up. To that point, it may be time to stop doing business with clients who aren’t prompt when it’s time to pay their bills on time. Instead, be more selective when choosing who you will do business with.
What’s Holding You Back?
It can be a lot of work to identify what’s holding you back and sometimes you need to look at your business from a different perspective, some business owners find great success simply asking for help from an outsider. There is no one-size-fits all solution. The best way to take control of your business is to work with a trusted advisor.
A great place to start is by listening to our podcast, Unsuitable on Rea Radio. Episode 10: The Revenue Sin covers business health and what you can do to strengthen your cash flow. When you are done, click here for additional resources.
Do you have a business question you need help solving? Send it to firstname.lastname@example.org and let us know what issues are challenging your business. We could feature your question on an upcoming episode of Unsuitable or in a blog post.
Looking for more ways to improve your business? Check out these articles:
All businesses need cash to operate. Without it, you can’t repay expenses let along find new ways to grow your business. But where can you go to find that needed cash? There are only three options: an investor, a bank or within your business. Read the rest of this entry “
A CFO, or chief financial officer, is the financial head of an organization. Usually reporting directly to the CEO, or chief executive officer, a CFO is responsible for keeping an organization financially healthy.
CFOs work in businesses, not-for-profit organizations and even some government entities. They are responsible for the finances, but what all does that entail? A CFO has four “COAR” areas of responsibility:
Revenue Read the rest of this entry “