Use This, Grow Faster

Hope the week is treating each of you well. I know it has been beyond warm here in Indiana, but we’re making the most of it. You should do the same!

You don’t need to be an accountant to use financial data well. You just need to know what to look at and how to use that within your business. I know some very strong business leaders who are very financially savvy yet their background is nothing in the accounting/finance realm…

Too many business owners rely on gut instinct when deciding whether to hire, expand, or invest in new tools. But gut alone won’t protect your margins. That’s where your financial data comes in to play to help provide clarity. It gives you a reality check, a roadmap, and the confidence to move forward without guessing on that big project, app you’re developing, or product you’re about to release.

Before you commit to growth, take a look at these key areas.

1. Cash Flow Trends

What it is: A record of all the cash entering and leaving your business over time, usually tracked weekly or monthly. If it were me…we’d develop this to be tracked daily honestly 🙂 
Why it’s important: It tells you whether your business is consistently generating enough cash to cover expenses and fund growth. Even profitable companies can run into problems if cash flow is tight.
How to use it: Review the last 3–6 months to identify patterns. Are you cash-positive most weeks? Are there seasonal dips? Use this insight to plan for timing investments, adjusting expenses, or securing funding ahead of time.

2. Gross Profit Margins

What it is: The percentage of revenue left over after deducting the direct costs of producing goods or services.
Why it’s important: It shows whether your business model is actually profitable. Thin margins mean you’re keeping less cash with each sale, making it harder to grow sustainably.
How to use it: Calculate margins by product, service, or customer segment. Focus your growth efforts on the areas with strong margins. Adjust pricing or reduce costs in weak areas before expanding.

3. Accounts Receivable Health

What it is: The status of unpaid invoices…how much you’re owed and how long it takes customers to pay.
Why it’s important: Slow collections can starve your cash flow and then eat directly into #2 above. If you're growing while waiting on payments, you're essentially financing your customers’ operations. I prefer the term I’m financing their debt and stress that those costs can add up quickly.
How to use it: Track metrics like Average Days to Pay (ADP), Days Sales Outstanding (DSO) and AR Turnover. Identify late payers and tighten your collection processes. Improve your invoicing systems so that growth doesn't create more cash stress. Want a free assessment on this and 3 actionable tasks for you/your team? Email me and I’ll help you out.

4. Operating Expenses

What it is: The day-to-day costs of running your business, such as rent, payroll, and software, divided into fixed and variable costs.
Why it’s important: Growth increases some expenses but not others. Without understanding how your cost structure behaves, you risk scaling inefficiency.
How to use it: Break down your expenses into fixed and variable. Identify areas to trim or renegotiate before adding new costs. This helps you grow lean and avoid unnecessary overhead. Look at how these expenditures impact the bottom line.

5. Break-Even Analysis

What it is: A calculation showing how much additional revenue is needed to cover a new cost, like a new hire, expansion, or investment.
Why it’s important: It helps you decide if a growth move is financially viable or if it needs to be delayed, restructured, or funded. All I can say is be careful working on expanding by 100% debt financing. To me, I’d avoid doing that where possible, to avoid long term issues.
How to use it: Divide the cost of the investment by your gross profit margin to find the required revenue. If the numbers don’t add up, revisit the plan before moving forward. Are you a leader in a position who brings this to the attention of others….speak up.

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Contact me if you’d like to network or partner together. I’d love to chat with you more about the services I offer on the side through Guernsey Consulting. If you do not know, I work full time in Treasury Management and do consulting on the side. Would love to chat or network with you about it.

Some of those services are listed below that we can help you with!