Restricted sales base

Tight cashflow is a product of one, or a combination, of three things you should focus on: poor sales; poor expense management; growing faster than your ability to fund. Believe it or not, the first two are easier to accomplish than the third. Here are the quick thoughts on these three:

1. Sales - Check the effectiveness of your sales staff. What is their close ratio? If it's low, either they're not capable or you're not competitive. You need to know the answer to that question, and either get them more training or get new sales people.

2. Expenses - Who's minding the expenses? Net profit is an important source of growth capital, and it's highly dependent upon your ability to control expenses. Paraphrasing Ben Franklin, every expense penny saved is a penny of profit you don't have to earn.

3. More growth than you can fund - This is the hard one because, in order to fix it, you actually have to do something that is completely counterintuitive for any small business: restrict sales volume. Regarldess of the business, failure is the ultimate result of sustained unfunded growth.

To learn more about outgrowing your capital, search again in this category.