It’s between $1 million and $10 million that the team needs to focus on cash. Growth sucks cash, and since this is the first time the company will make a tenfold jump in size, the demands for cash will soar.

The cost of a bad hire is 15x his or her annual salary, according to Topgrading, so it’s important to get the recruiting and selection process right.

Find the lead domino: the one initiative that, when pursued, makes it easier to accomplish everything else. Or identify the constraint — the choke point or bottleneck — and address it first. For more on how to choose this “critical” constraint, read my favorite biz book of all time titled The Goal by the late Eli Goldratt. Scaling up is all about eliminating constraints — in the business and for customers.

At ProService Hawaii, a human resources firm based in Honolulu, President Ben Godsey determined that in the 2014 fiscal year, his Critical Number was getting 600 referrals. This was a major stretch goal. The company, which has $311 million in annual sales (2019), had previously averaged fewer than 200 referrals a year, despite its focus on developing a great service culture and innovative products — indicated by a Net Promoter Score (NPS) consistently above 70% (on par with Apple).

Our pet peeve is when a company’s leaders think it should grow regardless of profit. This is just reckless, unless you’re a venture-backed firm pioneering new territory. For everyone else, we recommend getting profitable with the work you have, proving you can get to 15% profitability (based on our adjusted Simple Numbers), adding labor to knock profit back

to 10%, and then growing to 15% again. Lather, rinse, and repeat.

To tackle the cash conversion cycle, start by reading “How Fast Can Your Company Afford to Grow?” a Harvard Business Review article by Neil C. Churchill and John W. Mullins.