Too many companies make the mistake of expanding when they see things are going well, but they don’t have any retained earnings in place. The reality is that it takes money to expand. You have to have some dollars in reserve before you make the leap to growth, or you won’t be able to afford those new workers on the payroll and the increase in working capital. I’ve seen too many entrepreneurs get excited about growth, and they do it before having some financial reserves, only to have to re-trench six months later.
Contributor: Lisa Shepherd from themezzaninegroup.com