Growth Management is the process in place to ensure that the company’s market value increases on a consistent basis.
The following key tenets will ensure growth on a long-term basis:
1. Identify the major sources of Stress or Failure
- Determine the real causes of the company’s financial problems and address them with a bold and practical action plan.
2. Increase Cash Reserves to meet long-term financial obligations
- Implement robust accounts receivable collection program to reduce overall financial stress
- Reduce progressively inventory to reduce holding costs
- Establish priority payment on accounts payable to conserve cash
- Consolidate all purchasing if possible to generate savings
3. Reduce Operating Costs as necessary
- Activate an emergency cost structure that will eliminate all non-survival expenses in case of business slow-downs. This structure will stay activated until the business is financially sound again.
Analyze and manage the growth the company on a monthly or yearly basis and gather the following information:
- Net Profit Margin (Return On Investment)
- Operating Profit Margin (Return On Investment Before Interest and taxes)
- Gross Margin ( Return On Investment Before Variable and Fixed Costs)
- Break-even Amounts by period (The minimum amount required to remain operational)
- Retained Earnings (The progressive amount retained into the company’s balance sheet)
- Balance Sheet Overview (Equity, Assets, Liabilities)
- Debt/Asset Overview (Financial Stability)
- Efficiency Ratios (Key Financial Performance Indicators)
- Cash Flow Overview (Cash Financed, Cash Invested, Operating Cash, Net Cash Flow)
- Working Capital Overview (Current cash available after paying current liabilities)
- Greater assurance that the business will remain viable on a long-term basis
- Interest from investors because the business would demonstrate progressive growth
- Progressive growth of the company and greater marketability
Ratios are the Key Performance Indicators (KPIs) of a company and are divided into four sections: 1. Liquidity Ratios 2. Profitability Ratios 3. Financial Leverage Ratios 4. Efficiency Ratios Liquidity Ratios Working Capital Definition: The amount of capital available...
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