Ask your CFO to keep an eye on cash while on expansion

Cash is like air, which we need for breathing. Ensure business is liquid enough…..check working capital cycle…….

I realized this in my swimming class.

Yesterday, my instructor asked me to extend the swimming to 25ft instead of 10ft.

After moving 7-8 ft, I started struggling with breathing and was looking to stop as usual after 10-15 ft.

And finally, in spite of 2 weeks’ practice & high motivation, I ended up covering only 11 ft.

I analyzed this with the instructor.

What went wrong?

The issue was “I was not able to breathe while swimming”

I was supposed to take my mouth out of the water after 7-8ft & had to take some quick breathing.

I was able to co-relate this with the business while on expansion.

We need to keep a tight control on liquidity while we are flying.

We go on expansions based on huge borrowed funds supplied based on our past credibility and resources.

Tight liquidity creates insecurity for our existing established vendor payment cycles & also, the new business realizations may not be that smooth & easy.

So project your cash very carefully so that you keep breathing….

Check your liquidity after every jump……

Check your working capital cycle after new setups………

Breathe….. Breathe….. Breathe……

You are all set to move.

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