Growth & Strategy Conversations
Sales can double while cash runs out.
Growth is celebrated and profit is quieter, but a business can grow itself into trouble. More sales usually mean more stock, more staff and longer waits to be paid before more money arrives. This session helps owners see how growth and profit fit together, how to judge whether an extra rupee of sales is worth having, and how to decide between pushing ahead and tightening up.
Explore this page7 sections
Growth is a means. Profit and cash are what keep the doors open.
A business that grows by selling at thin margins may earn less as it gets bigger. A business that grows faster than its cash can follow may be unable to pay suppliers or salaries, even with full order books. And a business that never grows may lose customers to a rival and slowly weaken. None of these is a rule. Each depends on the business and the moment.
The useful question is not “growth or profit?” but “what does this business need now, and what would each choice cost?” This session gives owners the basic tools to answer it using their own figures. It is not financial advice; for tax, accounting or loan decisions, a qualified adviser should be consulted.
What the session covers
33 topics across 7 areas. Seven parts, each with a calculation owners can repeat at home.
Profit and Cash Are Different ThingsThe most common confusion.4
A hypothetical example, with round and made-up numbers, shows a business with rising sales and falling cash.
- Profit as what is left after costs, as recorded
- Cash as what is actually in the bank
- How a profitable business can still run short of cash
- Why unpaid invoices and unsold stock are not cash
What Each Rupee of Sales Is WorthMargin by product, service and customer.5
- Selling price less the direct cost of delivering it
- What is left to cover rent, salaries and other fixed costs
- Which products or customers look big but earn little
- Including the owner’s own time at a fair value
- Costs that are easy to forget: returns, delays, free extras
Many owners find that a few items earn most of the profit and a few lose money.
What Growth Ties UpWorking capital.4
- More stock, more raw material, more money owed to you
- More staff and space before the extra sales arrive
- The gap between paying suppliers and being paid
- A simple estimate of the cash needed for ten or twenty per cent more sales
Discounts, Volume and Big OrdersMore sales, less money?5
- Working out what a discount does to profit
- How many extra sales a discount must bring to break even
- Large orders with slow payment
- Customers who always negotiate and rarely return
- When it makes sense to say no
When to Push for GrowthReasons to speed up.5
- Margins are healthy and cash is comfortable
- Demand exceeds what you can supply
- A window of opportunity is closing
- The business gets cheaper to run as it grows
- You have the people and systems to cope
When to Protect Profit and CashReasons to hold and tidy up.5
- Margins are thinning as you grow
- You depend on borrowing to pay routine bills
- Quality or service is slipping
- The owner is stretched thin
- Customers are paying later and later
Tightening up for a quarter is often what makes the next stage of growth safe.
Funding GrowthQuestions before taking money.5
- What the money will be used for, and when it will pay back
- The cost and conditions of any loan, as stated in writing
- What happens if sales are lower than planned
- Whether the repayments fit within the cash you expect
- Whom to consult before signing: your accountant and a qualified adviser
Exercises owners do in the session
- List their main products or services and work out the margin on each
- Estimate the cash that ten per cent more sales would tie up
- Test one actual or planned discount to see how much extra volume it needs
- Choose three monthly numbers to watch and write down their target ranges
What participants leave with
- A margin-by-product worksheet and a working-capital worksheet
- A discount break-even sheet
- A one-page monthly dashboard template
- A list of questions for a lender or investor
What this session is not
- Accounting, tax or lending advice
- A recommendation to grow or not to grow
- A substitute for proper bookkeeping, which owners should discuss with their accountant
How the session runs
A facilitated workshop of around three hours, in a small group. A practitioner with finance or operating experience in small businesses walks through each calculation using a hypothetical business with round, made-up numbers. Owners then repeat each step with their own figures, which they are asked to bring in rough form. They keep their sheets private unless they choose to share.
What your students leave with
- The profit made on each main product, service or customer group, worked out with their own numbers
- An estimate of the cash a given amount of growth would tie up
- A rule of thumb for when a discount or a new customer is worth taking
- A view of whether the business needs growth, profit or cash most right now
- Three numbers they can watch every month
- Questions to ask a lender or investor before taking money to grow
Scheduled sessions
Nothing scheduled yet
Sessions are arranged with a college once a date is agreed. Ask us and we will find the right person for it.
A student rather than a college? See what is coming up, or ask your placement team to host this.
Know the margin, count the cash growth will tie up, and decide what the business needs now.
Tell us who your students are and what stage they are at. Sessions are free for participants.