1.10.4 Business Growth & Cash Flow Modeling

The New and Improved Business Growth and Cash Flow Model

The Business Growth Model was already an incredibly easy but powerful tool to model the growth potential for clients and prospects alike, but the all-new Business Growth Model (with added Cash Flow), takes things to a whole new level.

Whatever you call it: Cash, Cash Flow, or Strategic Working Capital, understanding the full impact movements in the key business drivers will have on sales, profit AND cash flow is critical. Critical for both setting realistic goals for growth, and for prioritising the input drivers to focus on to achieve growth.

This is also an incredibly valuable sales asset to help you sell your Financial Advisory services…

When business owners don’t understand how you could improve their business and their lives, persuading them to value and pay for ‘Financial Advisory’ services is tough.

However, when owners see the growth potential, using their numbers, persuading them to invest in their future by paying for enhanced financial reporting and support becomes much easier.

In a matter of minutes, you can show clients exactly how you can help them make dreams reality by improving profitability, equity value, and their bank balance.

In addition to modelling the impact of the Six Business Growth Drivers: (Acquisition, Retention, Transaction No. and Value, Gross Margin % and Overheads), you can also now model the impact improvements in Debtor Days, Creditor Days and Stock Days will have on the business’ cash flow and hence their professional and their personal lives.

Plan the best way to drive growth AND manage cash flow for optimum business success, using the summarised P&L projection, and the high level, cash forecast.

You are also given an overview showing what the impact of a 1% improvement in each driver will be on the year 5 profitability to instantly identify which drivers will deliver the greatest impact on growth for drivers 1 to 6.

For the Cash Flow Drivers, in a similar manner, you can instantly see what a 1 day improvement would deliver in terms of an improvement in the cash positoin in year 5.

The detail page is split into two sections, the top provides the summarised profit and loss overview for the most recent two years and the next 5 years.

You can use the model exactly as you do at present if you wish, or simply scroll down to review the cash flow forecast and the impact of various scenarios to help your client understant where they should focus to achive the optimum results in terms of sales, profitablity AND cash flow.

The Cash Flow Drivers and the Profit / Cash Impact projection:

The Business Growth This Year vs Last Year and projections for years 1 to 5:

The projected movement in EBITDA and an illustrative impact on the business value in the 5 years:

A graphical overview of growth / or contraction over the 7 year period:

The projection and impact on cash flow:

The year-by-year movement in cash, driven by movement in debtor days, creditor days and stock days: