The GrowthLab Four: Essentials for Your Business!

June 16, 2020

The GrowthLab Weekly Jump is an information session hosted every Monday that tackles relevant issues in today’s trying times. Jumpstart your week with practical advice in times of uncertainty.

In case you missed this week’s Jump session, you can find the slide deck & recording below:

This week’s focus is on The GrowthLab Four. 

Companies are challenged with the following four areas:

  1. Understanding your cash flow
  2. Know where you make & lose money
  3. Marketing for profit … not just revenue
  4. Paying employees for performance … to achieve company goals

These are essentials for your business!

Understanding Cash Flow 

  • Understand
    • Cash is King and Cash ≠ Profit
    • Cash conversion cycle
    • Cash is used to fund…
      • Operations (working capital)
      • Capital expenditure (finance)
      • Distribution to shareholders & owners (dividends)
  • Design
    • Anticipation & visibility are the goals
    • What are my immediate needs? Funding a scaling company or a payroll shortfall?
  • Implement
    • 13-week cash flow – Historical AP, vendors, recent expenses,& expected AR. Update weekly.
    • 12-month cash flow – Based on Annual Operating Plan (AOP/Budget) & Long Range Plan (3-5 yrs).
  • Measure
    • Actuals-to-budget, Days Outstanding ratio (DSO), indirect CF statement (Cash from Operations)
    • Net income is only as good as the cash conversion cycle

Know Where You Make & Lose Money

  • Understand
    • Making money is much more than watching your checking account grow
    • Knowing and understanding your gross margin contribution – avoiding unprofitable sales
    • 80/20 rule
  • Design
    • Designing a system that gives insight into customer level profitability or product line margins
    • How much time do I spend on billing, collections, & other non-value add drivers?
  • Implement
    • Take advantage of modern data programs (QBO, XERO, Intacct, Netsuite) that can import directly into your FP&A system
    • Set up your Chart of Accounts (COA) around your data reporting & analytics needs (not CPA / tax requirements, etc.)
  • Measure
    • Identify the important ratios and have them updated automatically
    • Review on regular basis weekly or, at minimum, monthly

Marketing for Profit… Not Just Revenue 

  • Understand
    • Do I have a niche? If so, what is it?
    • Your “sweet spot” customer will change as your company grows and changes
    • Name of the game: Customer and Market Segmentation
  • Design
    • Ranking your customer demographics
    • Focus marketing on most profitable product / service
  • Implement
    • Revisit: Are you underpriced? Overpriced?
    • Revisit: Are you targeting the right customers?
  • Measure
    • Revenue per marketing dollar
    • Marketing ROI
    • CAC vs LTV

Paying for Performance… to Achieve Company Goals

  • Understand
    • Employees provide value. You provide paychecks.
    • Know what you want from each employee (better quality product, customer acquisition, customer retention, etc.) so you know how to incentivise them
  • Design
    • Align employee compensation with the company goals; use company KPIs
    • Create relevant metrics for the employee roles
  • Implement
    • Understand the company culture & know your employees
    • Start with key employees – What do they want?, What do I want?… How do I combine the two?
  • Measure
    • Measure & give employees visibility regularly
    • Simplify. Design your general ledger / COA so that it’s easy to measure the metrics you’re incentivizing & compensating your employees on.

Learn More on The GrowthLab Four at

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