Tag Archives: Promising

How Do You Align Cash Flow with Growth? Eight Points

Situation: A Company is growing faster than its cash flow allows. This concerns the CEO because this growth involves promising technologies and products critical to the company’s future. What can the company do to improve current and new cash availability? How do you align cash flow with growth?

Advice from the CEOs:

  • Every growing company has experienced this problem and solved it; so can this company.
  • Grow more selectively. Review the available opportunities and select the most promising and profitable for focus. Restrict progress on less promising options for available time.
  • Search the Internet for books and resources that on this topic. For example, try “101 Techniques to Manage Cash While you Grow”.
  • There are experts, consultants and “Rent-a-CFOs” who specialize in this. Work with trusted contacts and/or search the Internet to identify appropriate resources who are familiar with the company’s industry and market.
  • Explain the situation and challenge to your vendors. Ask for opportunities to extend payments and “borrow” from them.
  • Explain the situation to customers and ask for better payments terms.
  • Borrow from an aggressive bank, factor payables, and/or find additional lending sources that offer attractive payment terms.
  • Be aware of and watch out for pitfalls that may cause serious problems. For example, an extended market contraction can leave the company stretched for cash.

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How Do You Take Advantage of a New Technology? Two Foci

Situation: A company has had early success with a promising new technology that compliments the company’s strategic direction. Their objective is to become one of the top suppliers and servicers of this technology in their service area. How do you take advantage of a new technology?

Advice from the CEOs:

  • Leverage the company’s strengths to create an early advantage in this technology.
    • Create a low-cost delivery system to take advantage of opportunities available through this technology initially at a lower margin, then offer enhancements to build margin to company norms.
    • Investigate other markets and applications where this low-cost delivery system can generate you new opportunities.
  • It is early to assess whether the new technology will become dominant, or just the latest fad. It has been on the market for less than two years and is just taking off.
    • Take the next few months to dig into what is happening within vendors of the technology, and how they are perceived by their client companies.
    • Talk to CIOs about their perceptions of the technology based on the last few quarters of experience – quality of implementation, quality of service. Other providers add a layer to the cost – is the service worth the cost or do client companies save over time through overhead reduction?
    • Talk to other vendors from other market areas – learn from their experience selling and working with the technology.
    • How do the other vendors make money? Are costs to their corporate clients offset by savings implementing the technology? What margins are the others enjoying and does this come from the initial technology, from add-on services, or complimentary sales. What is the perception of the sustainability of this technology both within the providers and to the CIOs? What about the technology really irks corporate clients? Where is the soft underbelly of this technology? Research may assist in making future decisions on how to approach the technology and clients.

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How Do You Raise Cash Short Term? Seven Suggestions

Situation: A CEO has identified a new business opportunity that looks promising but will require raising additional cash short term. What are good sources of short term cash, and what will simplify access to these resources? How do you raise cash short term?

Advice from the CEOs:

  • You must be the biggest critic of this opportunity. If it doesn’t fly to your critical eye, it will be hard to sell to others. As a reality check, ask yourself whether the opportunity is something on which you’d bet your house.
  • Build the new capability around a web distribution system that compliments your other capabilities. This broadens the appeal of the offer.
  • Generate an investment proforma and revenue stream. Most investors or debt financers will want to see this. You can position it as an immature business plan backed by your best estimate of the numbers.
  • You’ll need a business plan unless you’re lucky enough to find someone who believes that you can turn any opportunity into gold.
  • Presell subscriptions to target clients to prove the value of the offer – both to you and for investors.
  • Assure that any payments due from you go into an escrow account, to be released on a quarterly or other phased basis pending performance from the other parties within this deal.
  • This is not a venture capital story. Angel investors will seek a lower return for lower risk than VCs. Set some milestones for the Angels that will help them to see that you are monitoring their risk.

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