I speak to a lot of growing GovCon leaders and most of the feedback I get with regard to financing is that they have all too often made the mistake in researching their options too late. Most newer and growing businesses focus on the actual operations, and the important details that are not part of their expertise fall to the wayside. I always suggest that building a team of external resources to support your goals is equally as important as hiring the right people to service your internal mission.
Being successful in the federal marketplace takes more than just being great at what you do. It also requires more than who you know and how well you are marketing your capabilities. Being able to see what the future can hold for you with particular attention to the good and the bad that can happen is essential when charting your course. Here are some simple tips to set yourself up for a profitable navigation of the industry!
1. Planning ahead–the good, the bad, and the ugly
Having a business plan in place is so important in the beginning. This plan should not only include your chartered course over the next 3, 5, 10 years but benchmarks to gauge your success and failures along the way. With an understanding that you will face challenges ahead, you can use your business plan to create your strategies to pivot through any pitfalls. Cash flow crises can arise out of times of success equally as much as downturns. Not having visibility and control over your future cash availability can increase the likelihood that you won’t be able to financially perform on bigger opportunities. What are you doing to track cash flow? Do you know what it will take to maintain profitability?
2. What do you know about cash flow?
Tracking your cash flow is not the same as typical accounting principles. So first things first: you will need to be sure your CPA or bookkeeper knows how to manage this for your business. And next, that they are able to chat through a plan with you to maintain your control over your spending so you are in line with cash availability. Not every CPA will do this. If your accounting partner is not able to do this for you, you will need to find an outside resource to assist with tracking and controlling current and future cash flow.
3. Understand your options, how to access them, what is required, and how much it will cost
Knowing the types of funding accessible to you at each stage of growth is key. Knowing the criteria to qualify for the funding is next and understanding the fees to utilize the funding rounds out the most crucial items when seeking your lending partner. This process takes time, so waiting until after you have been awarded a contract might make it harder to pick the best option for you. You may lean towards the most readily accessible, which may result in paying too much and have it eat away at your profit.
If you don’t have visibility, control, and understanding of your current and future cash on hand you are bound to run into issues and may lack the time or ability to manage through. If learning more about creating a profitable GovCon is of interest to you, you don’t want to miss our exclusive event on January 31, 2023! Stay tuned to our LinkedIn page for registration details and be among a select group to learn from a globally recognized expert in cash flow optimization!