Turning Liquidity Crises into Growth Opportunities - 10/9/2024

I don't have a green thumb, but my wife does. She often has me repotting plants into larger pots, and they grow bigger year after year. However, once the pot is too small, growth is limited because roots are constrained. They grow more slowly or potentially get sickly.

When we think about the businesses we manage, what strategies do we employ for healthy growth, the kind of growth that doesn't sacrifice business quality?

When I stretch this gardening analogy to a liquidity crisis, one in which we have a cash flow problem and insufficient assets to generate cash, we don't have a larger pot to turn to. The worst-case scenario is bankruptcy, stunted growth is preferable. What if there is a better way to avoid both?

You'll need to manage cash flow differently, by introducing the notion of private credit. This leads to a host of positive outcomes such as better-timed debt and investment maturities and accounts payable and receivables terms that limit your risk exposure.

Read more about it in our book: Breaking Barriers: Overcoming the Top 5 Financial Myths that Keep You Broke - A Guide for the Small-Medium Sized Business Owner

Download the book: https://bit.ly/MRSeBook

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