Understanding Isolating And Allocating Growth Capital - Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent - Episode # 96
Every business wants to grow, but can growth potentially hurt your business? This week’s guest thinks so. He’s a speaker, entrepreneur, and financial expert who helps businesses uncover the secrets to profitability. Joining the show this week is Partner at Carr, Riggs & Ingram, Greg Crabtree!
Greg sits down with Mike Vannoy to explore the world of Growth Capital. Greg explains what the cost to power ratio is, how changing your billing cycle can free up revenue, and when it makes sense to borrow vs spend your own cash.
Takeaways:
- A common area where business owners get themselves into trouble is by trying to apply a method or practice from a different category of business to their own. If funding strategies don’t line up, businesses can quickly find themselves losing money.
- There are three capital types, light, moderate, and heavy. Capital light businesses hold no inventory or accounts receivable and get paid upon service. Moderate businesses hold either inventory or accounts receivable, and heavy businesses hold both.
- The cash to power ratio is between your trade capital amounts and your profits. If trade capital is 10% and profit is 5%, you will lose 5% of your revenue before making your first dollar. By decreasing trade capital and increasing profit, you access funds sooner.
- Growth is something that should be pursued, but not at the expense of the business. If you are looking to drive new revenue, but don’t have a line of credit available or cash on hand, prioritize growing your cash on hand first.
- One of the best ways to free up capital is to lengthen out how long it takes you to pay your suppliers, while at the same time shortening your payment times with your customers. If you can try to bill them as soon as services are rendered.
- Borrowed capital can be dangerous, but there are times where it makes sense. If you are buying a productive asset like a van or cnc machine, financing the purchase allows you to keep two months of business expenses in cash on hand.
- Businesses need to start with profitability, and profitability comes from understanding the data behind your business. Once you know the data you can identify which areas are making or losing you money.
Quote of the Show:
- “Cash is a choice and debt is a choice.” - Greg Crabtree
Links:
- LinkedIn: https://www.linkedin.com/in/greg-crabtree-simple-numbers/
- Company Website: http://www.CRIcpa.com
- Publications: https://www.simplenumberscri.com/books
Ways to Tune In:
- Spotify: https://open.spotify.com/show/2XThTdn7YC1lkAm0PgZUkj
- Apple Podcasts: https://podcasts.apple.com/us/podcast/mission-to-grow-a-small-business-guide-to-cash-compliance-and-the-war-for-talent/id1725890976
- Amazon Music: https://music.amazon.com/podcasts/328dddd0-3c4f-4b07-a0d3-13bdcb418486/mission-to-grow-a-small-business-guide-to-cash-compliance-and-the-war-for-talent?refMarker=null
- Audible: https://www.audible.com/pd/Mission-to-Grow-A-Small-Business-Guide-to-Cash-Compliance-and-the-War-for-Talent-Podcast/B0CS71KQFM?qid=1706208857&sr=1-1&ref_pageloadid=not_applicable&ref=a_search_c3_lProduct_1_1&pf_rd_p=83218cca-c308-412f-bfcf-90198b687a2f&pf_rd_r=A1ME8MBECSVZ6K4D7CNT&pageLoadId=QBtg12mqKsuZPLGY&creativeId=0d6f6720-f41c-457e-a42b-8c8dceb62f2c
- Podchaser: https://www.podchaser.com/podcasts/mission-to-grow-a-small-busine-5591006
Creators and Guests
Host
Mike Vannoy
Mike is a digital-first marketing executive with 25 years dedicated to helping HR companies thrive. As a board member of an AI software company and Chief Marketing Officer at Asure, he's been at the forefront of AI, HR compliance trends, and the changing demographics that shape today's marketplace. Under his leadership at Sales Engine Media, the company predominantly focused on the payroll, HR, and benefits industries, earning multiple spots on the Inc5000 list. Actively involved in multiple small businesses, Mike is a lifelong entrepreneur adept at navigating the changing workforce dynamics. He has held multiple executive roles at industry-leading HR firms, showcasing his expertise and leadership in the sector.
