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Should I continue to grow or should I slow down?

I started a new business on a shoestring budget in my backyard about a year ago. It's grown very fast and I've since moved out of my backyard into a 12,000-square-foot warehouse. I have been investing most of the money back into the company for inventory and labor.

I've raised my prices, and sales have leveled off. My problem is that the overhead needed to keep up with inventory and labor is high, but I can't catch my breath long enough to deal with cash flow. The cash flow isn't large enough to sustain the company unless I keep the volume up. Meanwhile, my credit score has dropped because I placed the company and not my personal bills first (mistake).

Should I try to get a line of credit from the bank or put the money coming in now toward the debt and slow growth?
Tim Berry answered September 8, 2008
URL: http://www.entrepreneur.com/answer/221623
This is why I recommend business planning. There should be flesh and bones on your plan to help you with the basic projections, including projected sales, costs of sales, expenses, profits, interest, taxes, assets, liabilities, capital and--by far the most important--cash flow.

Cash flow isn't profit. It's a matter of taking your present cash position and projecting it forward by estimating money going out (on costs of sales, expenses, purchasing assets, paying debts, etc.) and money coming back in (normally on sales, but don't forget that you have to allow for the time it takes customers to pay you.)

The only way to answer that question is to do the numbers. And then, watch the numbers and the flow, every month, at least once a month, to track whether you're on target.

If you don't have a plan, you can't even tell. But you should have a plan, and then you compare actual results to your planned results.

That turns planning into management and--congratulations, by the way--your question indicates you have some growth to manage.

Tim
Tim Berry is the chairman of Eugene, Ore.-Palo Alto Software, which produces business-planning software,
He founded Bplans.com and wrote The Plan-As-You-Go Business Plan, published by Entrepreneur Press. Berry is also a co-founder of HavePresence.com, a leader in a local angel-investment group and a judge of international business-plan competitions.