Mighty Tools

Chapter 6: The Liquidity Crash

Mighty Tools Chapter 6 Assessment

Step 1 of 4

The Liquidity Crash was identified as one of seven growth killers targeting midsized firms in Robert Sher’s book, Mighty Midsized Companies: How Leaders Overcome 7 Silent Growth Killers (Bibliomotion, September 16, 2014).

Chapter 6 describes the silent growth killer and examines the problems of midsized firms that precipitate cash crashes where the organizational focus shifts to finding money, and fast. But it doesn’t have to be that way. Determining and monitoring the financial stability of your firm is crucial. There are times when you may choose to risk the financial strength of the firm for growth, but with your eyes wide open.

What follows is an assessment rubric that works effectively for most types of growing midsized firms.

Even if we were to grow our sales a lot, we wouldn’t see our assets rise a lot. In other words, if our sales jump up, we won’t need much more inventory, and/or we won’t see our accounts receivables rise much, nor will we need to buy lots of equipment.*
We have been consistently cash flow positive over the past year years. This means that we have been able to take home cash, and have reduced any debt over the past few years.*