Great things in business are never done by one person; they’re done by a team of people. ~Steve Jobs
I have found in my experience with small businesses that oftentimes the business development plan and process doesn’t include taking into account the ability to financially perform. I have even been told by the business development and capture teams that the financial decisions are made exclusive of their process, and I find that presents challenges. When you are gauging the scope of work, scaling for a project, and managing the technical and operational trajectory of a contract opportunity, why would you not consider how much all of that will cost you, and how you will afford to accommodate the ability to perform at the highest level? Not to mention, where will this money come from? What do you actually have access to? How fast can you get it? How much will it cost?
Truth of the matter is, most business owners don’t have the skills to cover this component and may also lack the understanding of the importance in tracking cash flow vs profit. All too often this aspect is overlooked because it is another piece that requires outsourcing and the thought of paying for another service is daunting. However, empowering yourself with a basic understanding and outsourcing even at a fractional level can increase your profitability exponentially more than if you try to go it alone.
So, the first step is to recognize what you do and don’t know, identify solutions that can assist you, incorporate that assistance into your plan, and set everything into motion. Don’t look to do this post-contract award. This plan should be set in motion before RFP. Why? Because trying to figure out if you can financially perform after you win the work can significantly plague your decision process when searching for your funding solution and partner.
You can’t remedy cash access by winning more work, selling more goods, or providing your services to more users. The above will not necessarily equate to more profit.
According to an article by Tim Stobierski,
“it’s possible for a company to be both profitable and have a negative cash flow hindering its ability to pay its expenses, expand, and grow. Similarly, it’s possible for a company with positive cash flow and increasing sales to fail to make a profit—as is the case with many startups and scaling businesses.[…]“The key difference between cash flow and profit is while profit indicates the amount of money left over after all expenses have been paid, cash flow indicates the net flow of cash into and out of a business.”
Why wait until after you win it to see how and if you can fund it? Why not empower your business development and capture teams by discussing this while building the plan so that you can use their input to find the best solution.
There is nothing to be shy about! The need for cash infusions to fund growth is something every business, no matter size or industry, can relate to. Consult with your team to see what you will need to execute at the highest level. Take that plan to your financial partners and have them assist with using what you provided to connect the dots for the funding plan as well.
Stay tuned as we deep dive this year into helping business leaders reach their goals by developing plans that include lending options and partners that support growth!