The network for creativity
Join 1.25M professional creatives like you
Connect with clients, get discovered, and run your business 100% commission-free
Creatives on Contra have earned over $150M and we are just getting started
Back to feedPost
Your business can be profitable and still run out of cash.
One reason?
Your money is getting stuck between paying suppliers and collecting from customers.
Imagine a business that:
→ Pays suppliers in 15 days
→ Holds inventory for 45 days
→ Collects customer payments in 30 days
That means cash can be tied up for roughly:
45 + 30 - 15 = 60 days
So even when sales are growing, the business may need enough working capital to fund almost two months of operations.
This becomes especially important when growth accelerates.
For example:
A company increases monthly sales from $100K to $150K.
Sounds great.
But if customers take longer to pay while inventory needs to increase before those sales happen, the business may need significantly more cash just to support the additional revenue.
This is why I think revenue growth should always be looked at alongside:
→ Accounts receivable days
→ Inventory days
→ Accounts payable days
→ Cash conversion cycle
→ Operating cash flow
A useful question for a growing business isn't just:
“How much are we selling?”
It is:
“How long does it take for a dollar of sales to come back as cash?”
Because sometimes the fastest-growing businesses aren't the ones with the biggest cash reserves.
They're the ones that understand how quickly cash moves through the business.
How long does your business typically wait between paying for something and getting that cash back from customers?
#BusinessFinance #CashFlow #FinancialAnalysis #WorkingCapital #CashConversionCycle #SmallBusiness #BusinessStrategy #Finance
The network for creativity
Join 1.25M professional creatives like you
Connect with clients, get discovered, and run your business 100% commission-free
Creatives on Contra have earned over $150M and we are just getting started
Challenges
View all
Related posts
Revenue grows 20%. Profit grows 5%.
Then another business grows revenue by 20% and sees profit grow by 60%.
How can the same rate of revenue growth produce such different results?
One reason is operating leverage.
It comes down to how a business's cost structure behaves as sales increase.
Imagine a business has:
$100K revenue
$60K variable costs
$30K fixed costs
$10K operating profit
Now revenue increases by 20%.
If variable costs rise with sales but fixed costs stay relatively stable:
$120K revenue
$72K variable costs
$30K fixed costs
$18K operating profit
Revenue increased by 20%.
Operating profit increased by 80%.
That's operating leverage in action.
The same mechanism can work in the opposite direction.
When sales fall, a business with high fixed costs can see profits decline much faster than revenue.
This is why two companies with similar revenue can have very different risk profiles.
It also changes how we should think about growth.
Before expanding, a business should understand:
→ How much of its cost base is fixed?
→ How much increases with each additional sale?
→ How much spare capacity already exists?
→ What happens to profit if revenue grows 10%?
→ What happens if revenue falls 10%?
Growth isn't just about selling more.
It's also about understanding what happens to the cost structure when you do.
A business with strong operating leverage can scale quickly when demand is strong.
But the same structure can create pressure when demand weakens.
That's why revenue growth alone doesn't tell the whole story.
Sometimes, the most important part of a growth strategy is hiding in the cost structure.
How much attention do you think businesses should pay to fixed vs. variable costs when planning growth?
#BusinessFinance #FinancialAnalysis #OperatingLeverage #BusinessStrategy #FPandA #FinancialPlanning #Entrepreneurship #SmallBusiness
VEYORA — Health & Wellness Brand Identity
VEYORA is a conceptual health and wellness brand project that I designed with a focus on creating a modern, trustworthy, and approachable visual identity. The project includes the complete brand identity system, logo and symbol design, app icon, promotional creatives, smart wellness tracker concept, mobile app visuals, and comprehensive brand guidelines. I developed a calm, nature-inspired colour palette and cohesive typography system to communicate wellness, technology, care, and reliability. Through this project, I aimed to build a consistent and premium brand experience across both digital and physical touchpoints.
1 voted
50%
1 voted
50%
2 votes
Closed
A collection of custom presentation designs showcasing my creativity across the automotive, sports, retail, and technology industries.
So beautiful