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Christmas Don't Grow Broke

Business Planning: Christmas - Don't Grow Broke

Author: Brandon Jordan, CFP®, CHFC®, CEPA®, CVGA®, CLU®, MSA, EA | CEO of Impact Advisors Group

Most business owners are familiar with the cliché “if you’re not growing, you’re dying.” It’s technically true as it stresses the importance of continuous growth and adaptation in order to remain competitive and healthy. It’s based on the idea that a business needs to evolve and change like a living organism. If a business doesn’t adapt to market changes or stagnates, it will eventually decline and fail.

Unfortunately, many business owners only/primarily look at revenue as the metric to assess growth. This can lead to disastrous outcomes!!! Growing Broke is a very real possibility for many businesses. 

Revenue is Vanity

  • This is fun to talk about with friends, colleagues and professionals; but, we cannot buy groceries, pay for college, or take family vacations with revenue. 

Profit is Sanity

  • Profits are good, but even profitable companies can fail (a.k.a. Grow Broke).

Cash Flow is King

  • Business thrive or die on Cash Flow.

In order to avoid a Growing Broke scenario, the business owner (or leadership team) MUST know the company’s sustainable growth rate. If the actual growth rates exceeds the sustainable growth rate, then it’s only a matter of time before cash is entirely consumed… and it becomes VERY challenging to make payroll, pay vendors, and/or pay payroll taxes. This will require them to change their capitalization (e.g. using debt and/or equity financing options) and often becomes one of the most stressful situations for a business owner AND their family.

As a Christmas gift for the business owner(s) in your family/friend group, let’s help them avoid this scenario. Introduce them to IAG! 

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