Difference Between Cash Flows From Operating Investing And Financing Activities The Journey to an Accelerated and Sustainable Growth

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The Journey to an Accelerated and Sustainable Growth

Companies around the world face challenges when it comes to growth. They get to a certain point in their income and then stop for months or years, not sure how to get to the next level. Other companies achieve growth but then face challenges to manage it.

The performance of highly successful companies is higher than the performance of the industry average. Companies in the INC 500 index are growing almost 100 times faster than the entire economy? How is this possible? What do these companies have that others don’t?

The path to the company’s success can be seen as a journey where the company goes through different stages and has to overcome a series of challenges:

1. Be relevant

2. Identify the core competitive advantage

3. Build institutional capacity

4. Develop a management structure

5. Innovate

The first challenge is to become relevant to the market and be able to deliver value to your customers. Your customers need to understand that you add value to them by making their lives easier with your products or services. To achieve relevance, your company must focus on developing a clear value proposition and deliver it in the best way possible. This is a very difficult phase in the life of a company where the financial focus is on breaking even and positive cash flow. Only 1 in 5 companies survive this stage. The good news is that companies that survive the essential relevance stage generate significant value for their owners, creating a sense of achievement, pride and economic independence. Good things are coming!

However, this sense of “bliss” is actually a “small and medium business (SMB) trap.” It is very easy to feel good about what has been achieved so far and therefore stop here and stay at the SME level. An entrepreneur must have a strong vision of his success to avoid falling into the comfortable state of becoming a profitable small or medium-sized business. Other external factors can also help shake the entrepreneur out of this newfound sense of “bliss.” The economic environment, finding more demanding clients and increasing competition present challenges, but also an opportunity for the company to move forward and become a better organization than before.

Another challenge is to differentiate yourself from others by building a competitive advantage. During the early stages of a business, an entrepreneur usually feels pressured to take on different types of businesses just to generate revenue and move the company forward. These activities can lead to a loss of focus and the provision of products or services that are not really the core of the company’s business or what the company does best. This is the time to rethink strategy and ensure that the company focuses on what it does best, creating true innovation by moving away from commodities and towards a differentiated value proposition. This is the time for the company to focus on its core competencies and outsource the rest.

Companies often need investment to finance their innovation and growth, and at this stage there is a tension between the two: Should we direct our financial resources to finance growth or to invest in innovation?

The third challenge is to build the institutional capabilities that will enable the company to move from a “one man show” to an organization where different people can work together under clear roles and responsibilities without stepping on each other’s toes. An entrepreneur will need to hire and manage the right management team to succeed, as well as be able to align everyone under the same vision.

The road will bring a “tornado” that will shake and cause business. There will always be a tension between managing growth and profitability, as well as maintaining focus. In addition, the leadership of the organization will need to ensure that the talent and team in the organization are engaged and motivated throughout the journey, always giving their best.

The fourth challenge is managing in high growth environments. The leadership of the organization is in the daily trenches, which sometimes makes it difficult to see things strategically and from a distance into the future. The right management structure can set up the right sounding board to provide mentorship and guidance when needed, as well as contacts in different markets to continue growing the business. However, a management structure can only be useful if the people in the structure have the right insight into what is going on in the organization. Setting up the right coordination and control mechanism at every level of the organization will enable the creation of strategic dashboards that will provide visibility into the organization so that leadership can make decisions with the right information at hand.

At this point of business maturity, the entrepreneur enters a new point of bliss: the organization dominates its niche, operates in a high-growth, high-margin environment, and has excess cash flow to invest. But how can an organization maintain its dominant position?

The fifth challenge involves maintaining your ability to be flexible and innovative. This can be done by moving your current offering into other areas, as well as diversifying your product offering and/or moving into richer parts of the value chain to offer products or services that customers are more willing to pay for.

On this part of the journey, companies face a growth dilemma. Should they continue to grow organically? Should they look at potential strategic partners that offer complementary product or service lines? Should they enter into a joint venture with another company? Should they buy another company? Decisions need to be made on investment or acquisition of additional capabilities, which will require sophisticated sources of funding.

The road to the next market leader is not straight. Your company can be held in one or more parts of this trip. You need motivation to keep going and progress and the right tools and methodologies to progress. You need a driving force to help you get started and stay on track.

If you decide to take this trip, you will:

Use the full financial benefit of entrepreneurship

Create new jobs and restart the economy

At the end of the journey, you will be proud of your legacy to the world and become an inspiration to others to follow their dreams.

Impulsa Business Accelerator has experience in accelerating more than 400 companies and helping them achieve leadership in their markets. If you are interested in learning more about the Impulsa Business Accelerator and how we help companies along this journey, please do not hesitate to contact us at 1.855.IMPULSA or online at http://www.impulsaxl.com

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