Change ?

Change ?

Change …
How You Finance Growth
by Beth Polish

• Do you often feel behind the eight-ball when it comes to money?
• Is getting out financial statements every month like passing a kidney stone?
• Do you run from the idea of preparing a business plan with financial projections?
• Are you having trouble financing new opportunities even though you’re making lots of sales?

If you recognize yourself in any of these questions, then you’re not in a position to finance your company’s growth effectively. The good news is, it doesn’t have to be that way.

The starting point is recognizing a single essential principle -- Finance is the universal language of business, a language whose ideas are expressed in terms of money.

This may seem obvious at first, but it’s an idea that can have great power if you really embrace it.

Once you recognize this, you will see that the central story of your business is told in dollars and cents. When a customer buys your product or service, they’re telling you that they value it. When investors put cash into your company, they’re telling you that they recognize its (monetary) value. And, when bankers lend you money, they’re telling you that they believe in your cash flow projections.

So, the first goal in changing how you fund your business’s growth is to learn how to speak the language of finance. Here are some steps toward reaching that goal.

1. Stop thinking of money as a “dirty” necessity. Money is not something you only pay attention to when you have to. It’s the measurement that tells you how you’re really doing -- in all parts of your company’s operation -- and not just the bottom line.

2. Make finance and financing a core competency. Finance as an internal function is as important as sales, marketing, human resources, and operations. Instead of pushing money off to be handled by others, get involved yourself. This doesn’t mean you need to make the bookkeeping entries. But you do need to get over your fear of balance sheets, income statements, and cash flows so that you can read, understand, and use them.

3. Actively use your financial projections. Financial projections tell the story of where you’re company plans to go in the future, but they’re also a key strategic tool to help you monitor your progress. And, they can act as a guide to running your company.

With respect and understanding of money’s complex role comes power. Speaking the language of finance will put you in a position to change the dynamics of how you finance growth. You’ll be able to go after the right kind of financing, find the right sources, and talk to them in terms they’ll respond to.

You can do it. This is a language that anybody can understand.

Beth Polish, founding CFO of iVillage, is president of The Critical Junctures Group, which helps companies with start up, growth planning, mergers and acquisitions, turnarounds, and securing financing. She is author of In the Market for Money, the first in the primer series of DROOM™ (Don’t Run Out Of Money) books. Beth can be reached at bpolish@criticaljunctures.com  and www.droombooks.com.  

© 2005, Beth Polish.