Cash is the life source for the existence and future of your company. Cash, not receivables, not prospective contracts, but CASH that funds every aspect of your company. You can’t pay your employees with the deal you’ve been chasing for 6 months that hasn’t closed yet.
Cash is the life source for the existence and future of your company. Cash flow meaning the dollars and cents that are flowing in and out of your bank account. It’s not hypotheticals and all those made up numbers in your CRM. Cash, not receivables, not prospective contracts, but CASH that funds every aspect of your company. You can’t pay your employees with the deal you’ve been chasing for 6 months that hasn’t closed yet.
Have I made that point clear yet? Therefore, the framework for the decisions you’re making should be on a cash generation basis, especially if cash is a significant constraint for your business. This framework should apply through the lifecycle of your company. To get practical, let’s look at two potential deals: Deal #1 is going to take at least 9 months to close, conversations have been bouncing back and forth, terms keep changing and it keeps getting delayed, but could generate $1M in sales. Deal #2 could close in 3 months because it’s a smaller organization and the team is motivated to make the deal but will only generate $300k. Because of resources, you don’t have the bandwidth to pursue both deals and if you did, you may lose both of them. The smart move would be to close the smaller deal now so you can have the cash to chase the larger deal down the road, or possibly an even larger deal. Cash is your liquidity and life blood, so getting more of it as soon as possible is a good thing, especially if you’re in growth mode.
To that token, don’t do anything stupid just to get a deal in the door. Keep in mind everything else we’re talking about here, especially with margins. Don’t go after deals that have much smaller margins just to say you have a deal closed and put off other non-sexy deals that could provide a larger margin, but may not be as big in $$$. Sales cure all but only when they add to the bottom line.