As a business grows, it needs more resources and therefore more capital. It is important to understand another fact. The availability of capital for any business is limited, and it therefore follows that the growth rate a business can sustain and still survive is also limited. In other words, a business that grows too quickly will fail. A business that grows too slowly will deny its owners potential returns.

The fundamental issues which determine how quickly a business can grow are:

• The magnitude of its net profit and hence, market demand and cost structure.
• The willingness of the owners to reinvest after tax profit to finance additional resources.
• The availability of debt finance, which depends on the capacity of the business to service and the security that can be offered to lenders.

To determine how fast you can grow your business, you need to look at your projected cash flow. You can only grow your business as fast as your cash flow allows.

To learn more about projecting your cash flow and planning your growth, please attend our free, interactive workshop entitled “New Year: New Business Plan.” For more information and to RSVP, visit www.simonsbitzer.com.