He had a goal: build a million-dollar business.
When we started working together, his remodeling company was doing about $425,000 in annual revenue. He had ambitious plans for growth and was investing accordingly.
A showroom. Inventory. A truck. Marketing. A sales manager. An operations manager.
And the growth came.
Within two years, revenue had climbed to more than $1.1 million.
There was just one problem.
The business still wasn’t making money.
Blog
This section provides an overview of the blog, showcasing a variety of articles, insights, and resources to inform and inspire readers.
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Where Did the Cash Go?
The financial reports showed revenue. The bank account showed $1,500. When the two tell different…
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The Tool Left Over
Sometimes the most useful tools aren’t the ones you set out to build. They’re what’s…
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The Complicating Problem
A business more than doubled its revenue and still wasn’t making money. Sometimes the problem…
In fact, expenses had climbed to about $1.115 million. And somewhere along the way, the business had accumulated close to $100,000 in debt.
We had originally started working together to implement a cash-allocation system, called Profit First, designed to help business owners manage their cash more intentionally.
We could make the allocations.
But the money wouldn’t stay put.
Cash set aside for debt reduction or reserves would eventually have to be pulled back into operations. Payroll needed to be made. Bills needed to be paid.
It would have been easy to keep adjusting the allocations.
But the allocations weren’t the problem.
The business had successfully done the thing its owner had set out to do: grow.
What it hadn’t done was become more profitable as it grew.
That changed the question.
Instead of:
How should we allocate the cash?
The more important question became:
Why does a million-dollar business still not have enough money?
And that question led somewhere very different.
It led to the infrastructure built in anticipation of growth. Which investments were actually producing a return. The growing debt and the cash required to service it. And ultimately, the difference between growing revenue and building a financially stronger business.
I’ve come to think of this as the complicating problem.
It’s the thing that makes the obvious solution not quite work.
You can encounter it almost anywhere in a business.
A reporting problem complicated by the way information is being entered.
A staffing problem complicated by a broken process.
A cash-flow problem complicated by pricing.
A growth problem complicated by debt.
Sometimes the original problem is real.
It just isn’t the whole problem.
And that’s usually when I get curious.
What else is going on here?
Blog
This section provides an overview of the blog, showcasing a variety of articles, insights, and resources to inform and inspire readers.
-
Where Did the Cash Go?
The financial reports showed revenue. The bank account showed $1,500. When the two tell different…
-
The Tool Left Over
Sometimes the most useful tools aren’t the ones you set out to build. They’re what’s…
-
The Complicating Problem
A business more than doubled its revenue and still wasn’t making money. Sometimes the problem…
Blog
This section provides an overview of the blog, showcasing a variety of articles, insights, and resources to inform and inspire readers.
-
Where Did the Cash Go?
The financial reports showed revenue. The bank account showed $1,500. When the two tell different…
-
The Tool Left Over
Sometimes the most useful tools aren’t the ones you set out to build. They’re what’s…
-
The Complicating Problem
A business more than doubled its revenue and still wasn’t making money. Sometimes the problem…