Part 2/5 - Don't Get Left Behind When "The Growth Hits The Fan"!
Posted on May 29, 2012 by Joe Blow, One of Thousands of Business Coaches on Noomii.
"To Do" #2 - Find Financing For Growth!
It’s called “The Cash Gap” and few people really think about it much.
Let’s say your sales are $100,000 per month. You buy something, and three months pass before you sell it and/or get paid for it.
In this scenario, you need to float $100,000 for thee months, or $300,000 total to finance those transactions. This is your working capital.
What has likely happened over the past 4 years is; your sales have declined to, let’s say, $50,000 per month, therefore you only needed $150,000 in working capital and you have probably used the other $150,000 to cushion the blow of the decline, to pay expenses, pay for extended receivables, or pay yourself.
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