Entrepreneurship
Growing turnover without growing margin: the most common SME trap
When revenue rises and cash gets tighter, the problem is almost never sales. It is pricing, structure and discipline.
Sample content
Growth consumes cash. Every additional order is paid for before it is invoiced, and often long before it is collected.
The first thing to check is not the sales pipeline but the price list: are indirect costs, unbilled hours and rework included in the price of the service?
The second is the client mix. Growth built on the least profitable segment mechanically dilutes the margin — the company works more for the same result.
The third is the collection cycle. A business that grows twenty per cent with a payment delay of ninety days finances its own clients.
The correction is rarely dramatic: reprice, choose the segment, tighten collection. In that order.