Category Archives: Additional Info

Keep Projected Balance Sheets Simple

A projected Balance Sheet is a perfect example of the critical difference between planning and accounting. The Balance Sheet statement produced by accounting is full of important detail about each item, while the Balance Sheet projection in forecasting is necessarily summarized and aggregated.

This means that your balance sheet categories should be summary categories from your accounting. For example, assets categories are probably only Cash, Accounts Receivable, Inventory, Other Current (or Short-term) Assets, and Long-term Assets (or Plant and Equipment). Liabilities are probably only Accounts Payable, Current Notes (or Loans), Other Current Liabilities, and Long-term Liabilities. Capital is only Paid-in Capital, Retained Earnings, and Earnings.

There are two good reasons for this:

  1. You can only produce properly linked and correct fully balanced projections of Profit and Loss, Balance Sheet, and Cash Flow if there are exact links between the items on the Projected Balance Sheet and those in the Projected Cash Flow. That’s a fact of math and financial principles.
  2.  It’s useless to try to predict future assets and liabilities in detail; nobody can do it. So you might be able to estimate the total amounts of future purchases of assets, using some reasonable assumptions; but trying to estimate the month of purchase and value of each future asset is a waste of time.

In contrast to the Projected Balance Sheet, the Balance Sheet as a financial statement is a compiled report drawn from a database of details. Accounting knows each transaction: exactly when each asset was purchased, for how much, and its depreciation history and schedule. Accounting knows each loan (called notes) history. Every detail in the statement is based on actual transactions. It goes into tax reports and legal reporting. The projection, on the other hand, is a collection of educated guesses that help you plan your financial needs in advance.

Handling of depreciation is the best example. The accumulated depreciation in a Balance Sheet Statement is a summary of detailed depreciation for each asset the business owns. It comes from the depreciation in the Profit and Loss Statement, which is compiled from the detailed depreciation of each asset. Tax code defines allowable depreciation schedule for each asset according to type, so for example, buildings are normally depreciated over 30 years, while vehicles might be over three or five years. Depreciation in a Projected Profit and Loss, in contrast, is an estimated guess of an aggregated future amount. A good forecaster will look at depreciation over the recent past, plus projected purchases of new assets, to estimate future depreciation. That estimate ends up in the Balance Sheet as Accumulated Depreciation, which subtracts from the value of Long-term Assets.

Starting Balances for Your Projections

To do your financial projections well, you need to start the balance sheet and then adjust it according to assumptions in the cash flow. How you start your balance sheet depends on what numbers you have.

For an Ongoing Company

If you’re an existing or ongoing company, your starting balances for next year’s plan are derived from this year’s plan. The following illustration shows what Garrett’s Projected Balance Sheet looks like at the beginning of next year’s plan. Let’s pretend Garrett’s bicycle shop is an ongoing business. Instead of estimating startup costs, he would start his annual plan for this coming year in October of last year. He would have started it with the last two columns of his planned balance sheet from the previous year’s plan, as shown:

Example Starting Balance Ongoing Company

For a Startup

However, Garrett’s bicycle store is a new startup business, so he plans for startup costs. He uses the startup worksheet in this illustration:

Sample Startup Costs Estimate

And his Projected Balance Sheet has a column for starting balances:

Sample Cycle Shop Starting Balance

You might notice that the startup has a loss at the beginning. In this case it’s a loss of $3,150. Almost all startups begin with an initial tax loss equal to the startup expenses (don’t be disappointed; that’s the way almost all startups begin. That loss means you’re keeping track of expenses so you can deduct them from taxable income later, when you make a profit).



Important Cash Flow Vocabulary

These words put some people off because they sound like accounting and financial analysis. But they’re good terms to know, especially if you’re running a business. This is important cash flow vocabulary.

  • Cash in business planning and financial projections is not coins and bills. It’s liquidity, money in checking and other instantly available accounts; money you have and you can spend.
  • Cash sales include sales by real cash, bills and coins; plus sales paid by check or credit cards. In financial projections, sales are either cash or on credit (below).
  • Sales on credit isn’t about credit cards, but rather the common practice of businesses selling to other businesses, and sometimes businesses selling to consumers. It’s also called sales on account. It refers to when a business delivers the goods and services to a business customer along with an invoice that will be paid later, not immediately. The amount involved is considered Accounts Receivable for the seller, and Accounts Payable for the buyer.
  • simple collection days formulaCollection days is how many days, on average, a business waits for customers to pay their invoices. The unit is days, so 30 is about a month and 90 about three months. Accountants and analysts calculate average collection days for a business by multiplying 365 times times the average receivables balance and dividing that by annual sales on credit. And this is often called Collection Period.
  • Receivables is short for Accounts Receivable, which is money owed to a business. It may include some outstanding loans to employees, for example, and some other items; but the bulk of Accounts Receivable, and analysis of Accounts Receivable, is amount owed to a business by customers who haven’t paid yet.
  • Accounts Payable is money a business owes. When your business customers haven’t paid you, what is accounts receivable to you is accounts payable to them.
  • Payment days is how many days, on average, a business waits before paying its invoices. The unit is days, so 30 is about a month and 90 is about three months. In many ways it’s just the other side of the coin of collection days. If I’m your customer, then my payment days figure into your collection days. However, the formulas for payment days are harder to deal with than for collection days, because standard accounting keeps much closer track of sales on credit than new entries to accounts payable, and new accounts payable is not an obvious concept. So I’m defining it with this illustration:new-payablespayment days formulaTotal New Payables for a year would be the sum of all the monthly entries in the bottom row of the illustration above. So once you get that number for total new payables, you can then calculate payment days with a formula similar to the one for collection days: multiply the average payables balance by 365, and divide that product by the total new payables for the year.
  • Inventory is goods and materials that you’ve purchased and you keep until you sell it to customers. That could be materials you’re going to assemble into something, or products you’re going to sell. Inventory is an asset. It doesn’t become a cost until you sell it. Therefore it doesn’t show up on the profit and loss statement until you sell it. But you may have already paid for it by the time you sell it.
  • inventory turnover formulaInventory Turnover is a measurement of how much inventory you have on hand. Inventory on hand tends to be a drain on working capital because you pay for it before you sell it. The higher the turnover, the less inventory is sitting in your business waiting to get sold, and the better for cash flow. Analysts talk about “turns,” so that if your average inventory is equivalent to a year’s worth of sales, that’s one turn. Businesses aim for 10, 20, or more turns. Calculate inventory turnover by dividing your cost of goods sold by your average inventory balance.

Word of warning:

Unfortunately, even with financial analysts and accountants as literal as they are, with their insistence on things being exactly correct, there are different ways to calculate some of these numbers. And, to make matters worse, many of them calculate a number one way and don’t realize that there is more than one way. For example:

  • Many of them use the number 360 in these calculations instead of 365
  • Many of them use ending balance for these calculations instead of average balance.
  • Many of them calculate payment days using cost of goods sold instead of new payables.

And other discrepancies will turn up. Don’t take them too seriously when they say that one of these calculations are wrong. It’s just different.

How to Project Cash Flow

LivePlan Users Click HereA good cash flow analysis might be the most important single piece of a business plan. All the strategy, tactics, and ongoing business activities mean nothing if there isn’t enough money to pay the bills. And that’s what a cash flow projection is about – predicting your money needs in advance. profits-vs-cash-small

The Projected Cash Flow is what links the other two of the three essential projections, the Projected Profit and Loss and Projected Balance Sheet, together. The cash flow completes the system. It reconciles the Profit and Loss with the Balance.

We do the lean plan with a discussion of cash traps instead of the full detail of the cash flow analysis. That might be enough for the lean plan, but eventually you’ll want to build a real cash plan, using real numbers, and real financial math.

Experts can be annoying. There are several ways to do a cash flow plan. Sometimes it seems like as soon as you use one method, somebody who is supposed to know tells you you’ve done it wrong. Often that means that expert doesn’t know enough to realize there is more than one way to do it.

Direct Cash Flow

So here is a direct cash flow plan. You can see the potential complications and the need for linking up the numbers from the other statements. Your estimated receipts from accounts receivable must have a logical relationship to sales and the balance of accounts receivable. Likewise, your payments of accounts payable have to relate to the balances of payables and the costs and expenses that created the payables. Vital as this is to business survival, it is not nearly as intuitive as the sales forecast, personnel plan, or income statement. The mathematics and the financial projections are more complex.

Here’s Garrett’s Projected Cash Flow for the bicycle shop, so you can see how that works:

Sample Projected Cash Flow

Estimating Receipts from Receivables

The first two rows of Garrett’s cash flow projection depend on detailed estimates of money coming in as his customers on account pay their invoices. To estimate that, he lays out his guess based on the assumption that only 10% of his sales are on credit (on account), and that his customers pay their invoices in about one month on average. That estimate looks like this:


In this case, the sales on credit are 10% of the estimated total sales in the Sales Forecast, $26,630. That’s the result of Garrett’s assumption, based on the nature of his business. And the money involved comes in one month later. This worksheet projects the Accounts Receivable value in Garrett’s Projected Balance Sheet, as well as the Received from AR value in the Projected Cash Flow. The receivables analysis depends on information in the Profit and Loss Projection, plus an assumption about Sales on Credit, and another on waiting time before payment. And it affects the Projected Balance and the Projected Cash Flow, as shown in this next illustration:

Showing Links in Assumptions for Receivables

Estimating the Impact of Inventory

Inventory presents another set of important cash-related assumptions. I explained earlier that in the case of inventory, proper accounting practices require special details. The cost of inventory that shows up in the Projected Profit and Loss is related to timing of sales. The actual cash flow implications of inventory depend on when new inventory is purchased, as shown here:


As with Accounts Receivable in the previous illustration, the inventory analysis depends on information from the Sales Forecast, and it sends information to both the Projected Balance Sheet (Ending Inventory) and the Projected Cash Flow (Inventory Purchase).

Estimating the Impact of Payables

Most businesses wait a month or so before they pay invoices for goods and services received from other businesses. That means we can save on our cash flow by holding back some money and paying it later. With proper accrual accounting, that money is recorded on the Balance Sheet as Accounts Payable. Estimating Accounts Payable takes a careful combination of calculations and assumptions. First we have to collect the full amount of payments. Then we account for payments made immediately, not held in Accounts Payable. After that, we estimate how long, on average, we hold payments. That analysis is shown below:

In this case, it is assumed that the store will pay its bills about a month after it receives them.

Cash Flow is About Management

Reminder: you should be able to project cash flow using competent educated guesses based on an understanding of the flow in your business of sales, sales on credit, receivables, inventory, and payables. These are useful projections. But real management is minding the projections every month with plan vs. actual analysis so you can catch changes in time to manage them. The illustration here shows projected profits for the bicycle store compared to the projected cash flow, using the projections presented in this chapter:

Profits vs. Cash


This chapter continues with Indirect Cash Flow, the next section…

Sources and Uses of Cash Example

Indirect Cash Flow Method

An alternative cash flow method, called indirect, projects cash flow by starting with net income and adding back depreciation and other non-cash expenses, then accounting for the changes in assets and liabilities that aren’t recorded in the income statement. This one comes from the Sources and Uses of Cash Statement that frequently serves as a surrogate for a Cash Flow in formal financial statements.

Sources and Uses works great for analyzing cash flow after the fact, with past financial statements. It’s a simple way to understand where the money came from and where it went. For example, the following illustration would show the bicycle store Projected Sources and Uses for February of Year 1, with the same numbers shown in the previous section on cash flow and in Chapter 18 on Projecting the Balance Sheet:

Sources and Uses Example

Notice that this seemingly simpler method produces exactly the same cash flow projection as the direct method. When you turn back to the previous and compare it, the direct method involved more than 25 rows of calculations (many with zeros in them) compared to the six rows here.

While this works great after the fact, when you know what happened, there is a catch in using this method for projecting the future: We don’t know whether any given item is a source or a use of cash in any future month. For example, in the bicycle store projections for June of Year 1, both Accounts Receivable and Inventory amounts decreased, so they became a source, not a use, of cash; so the layout has to change for a Sources and Uses cash flow:

Sources and Uses of Cash Example

During my years with financial projections, I’ve developed an alternative to Sources and Uses, also based on the indirect cash flow method, which works better for the ebbs and tides of projected balance amounts over months and years. The following illustration shows how it works:

Sample Indirect Cash Flow Method

Either direct or indirect cash flow methods, when applied correctly, give the same results. I find the direct method, despite having more rows, is generally easier to understand because as you make inputs you are projecting payments or receipts, money going out or coming in, while with the indirect method you project changes in balance amounts.

In fact, for years now, I usually include both methods in my projections, so that the one provides an automatic error check of the other.

Real-World Business Strategy

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”

– Michael Porter

The above quote combines beautifully with the other Michael Porter quote at the beginning of Chapter 4, Set Your Strategy.

“The essence of strategy is choosing what not to do.”

That’s how I see strategy in the real world. Like sculpture, strategy is what’s left over after you take things away. Michelangelo started with a big block of marble and chipped away until he ended up with the statue of David.Strategy is Like Sculpture

Strategy is focus. As you match your business offering to what the target market wants, you exclude things. The high-end restaurant doesn’t have drive-through or discount lunches. The social media consultant doesn’t do logos and graphics. The mobile app doesn’t include every possible feature that the most extreme power user wants, but just what makes it intuitive for most users. Most of us who own businesses instinctively want to do everything for everybody, but we can’t. We have to work with the principle of displacement:

Everything you do in your business rules out something else that you can’t do because you’re doing that first thing.

As you read this chapter, please keep in mind my simplified Identity-Market-Offering (IMO) strategy framework, which I included in Chapter 4 on the strategy summary of your lean plan. If this chapter were a stand-alone summary of business strategy, it would start with that one. And then continue with the others that are included here:


business stories

Stories as Strategy

Stories are the oldest and probably the best way to communicate ideas, truth, and beliefs. Stories are powerful. Think of the key stories that are foundational in the great religions. Or think about the stories behind the phrases “sour grapes,” “the fox in the henhouse,” and “the emperor’s new clothes.” They all have power because they communicate. They resonate. We recognize their truths.

“All human beings have an innate need to hear and tell stories and to have a story to live by.”

– Harvey Cox

business stories

business stories

Stories are a great way to define and communicate business strategy. A strategy that can’t be told as a story is doomed. And a strategy could be laid out as a story that includes the IMO factors, for example. And  it could be as simple as a story defining the problem your customers have, the solution your business offers, and the factors that make your business especially suited to offer the solution. In this method the problem is also called need, or want, or, if you like jargon, the so-called “why to buy.” That’s slightly different from IMO, but that difference is not important. Strategy should be flexible. And a lot of successful presentations start with the problem and its solution.

Your Essential Business Story

Strategy starts with an essential business story. Imagine a moment of purchase. Somebody is buying what you sell. It happens with every business. For example:

  • A group walks into your restaurant.
  • A web browser subscribes to your membership site.
  • A customer in your store picks up one or more products, puts them into a basket, and walks to the checkout counter.
  • A potential client decides to take on your management consulting or social media marketing.

In every case, there is a story. Think it through. Who is this person? How did he or she find you, your store, your restaurant, or your website? Was it by answering an email, looking at an ad, talking to a friend, or maybe searching in a Yelp app on a mobile device?

Every transaction is a solution to somebody’s problem. Understand what problem – need, want, or why-to-buy – you’re solving. Consider this famous quote:

“People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”

– Theodore Levitt

So you don’t invite somebody to a sushi restaurant just because you’re both hungry. You want an interesting meal; you want to sit down together for a while and talk. It’s an event, an activity, with hunger satisfaction far from the top of the list.

You also need to understand what business you’re in. The restaurant business is often about occasions, not meals. The drive-through fast food business is about convenience. Starbucks is about affordable luxury, not just coffee; and in some cases, a place to meet, or a place to work.

So the solution has to match the problem, but it should demonstrate what’s different about one company when compared to all its competitors. For example, to make a restaurant story based on fine food credible, you need to add in how this restaurant’s owners and team can credibly deliver fine food. And in the software company example, there must be a sense of this company being qualified to deliver useful content in this topic area. That takes us back to the Identity component of the IMO framework; but it could also be called simply the secret sauce, or why we’re different, and presumably better.

A Real Example

Let’s return to the social media consulting company I mentioned in the previous IMO discussion: Here’s its essential business story:

Terry loves her business, puts her heart and soul into it, and is successful. Her sales are growing, her customers are happy, and her employees are happy and productive.

She’s worried about social media. She knows it’s important for her business’ future. She knows her business should be on Twitter, Facebook, and the other major platforms. Experts seem to agree that business owners should engage. However, she’s already busy running a business, and she doesn’t have time to do meaningful social media as well. When she’s not running the business, she wants to be with her family, not on the computer.

Terry tried having an employee handle the social media, but it was still taking too much time. She made inquiries with some consultants, but they are expensive.

Finally, on the web, Terry finds Have Presence, a small business like her own, run by three co-owners who love social media, understand small business, and do only thoughtful, strategic social media updates for clients they know and represent well. They aren’t selling expensive consulting, telling Terry what and how to do it. Instead, they do the work, manage the social media, and give Terry’s business social media presence, for a monthly fee that’s considerably less than a half-time employee, without the long-term commitment.

That story defines all three of the IMO factors in Chapter 2, Set Your Strategy. Identity is there in the phrase that begins “the three co-owners love social media and understand small business.” Target market is there in Terry, the business owner, and her problem with social media. And offering is there in the sentence that begins with “They aren’t selling expensive consulting.”

That story also fits the problem-solution mode in Chapter 11, Lead with Stories, along with the additional input I recommend: how your company has a unique solution offering, and why it is especially qualified.

Stories can describe some important visions of truth better than, say, statistics. The real market isn’t a number on a chart or in a table; it’s that collection of people. Sure, the number is nice, once you know the people, but first you have to feel like these people actually exist, and the reason to buy exists, and that the people and the reason match up.

The Story Your Customer Tells

Imagine how your customer found you. What did he think was good or interesting or remarkable about you or your business? Why does she go back for repeat business? What do you want that story to be, and how can you influence that story? This is where the story leads to better business planning as alignment of all the elements of the business with your ideal story.

Your most powerful branding, like it or not, is the story that the customer tells her friends. Imagine your customer explaining your business to a friend. How would she describe your business? What can you do to influence that story?

Even before social media, there was viral marketing, and before that, referral marketing, guerilla marketing, and going back even further, word of mouth. John Jantsch, author of Duct Tape Marketing, calls it getting people to know, like and trust you. Seth Godin, author of All Marketers are Liars, calls it being remarkable.

And now, with social media, Jim Blasingame, author of Age of the Customer, says your customers control your brand. Your business depends on collective opinions published in tweets and Facebook updates, Google+, Pinterest, and LinkedIn. It’s amplified word of mouth, and it’s in the hands of the world at large, independent of your advertising budget, signage, and tag lines.

Know the story. Create the story. Plan in useful steps how to make it true.

Some Other Useful Stories

So maybe thinking of the story can help with your business planning – and I mean your running planning process, that happens at regular intervals, that helps you manage and steer your company, rather than just a use-once-and-throw-away document – because much of good business planning is story-driven.

The Pot of Gold

Dream. Imagine your business future. Where is it, what is it, how big, and what’s it doing? This is the story of success for you as a business owner. Are you in the office every day working? Do you have assistants working for you? Are you the boss of all you see or are you focusing on your favorite parts of it, like speaking, or product development, or finance? Are you free to take vacations and coach your kids’ soccer teams? Are you a famous success story?

This one, by the way, is a version of the mission statement, a common component of a formal business plan.

The Stairway

The steps: Tell yourself the story of how you got from where you are today, in your business, to where you are in that dream. Imagine the key steps along the way. What had to go right? Can you set out some important milestones, like the launch or the opening or the big campaign, the new product, the new store? Try to break the story down into specific events you can use to set dates, and milestones you can track. Take notes and keep track.

Management, Done Well, is a Collection of Stories

Your business revolves around the story of your history and your values and your team as it grows.

With business planning, you don’t just tell the stories of the past, you also create and develop the stories of your future. Look ahead with your plan, control your destiny, and drive it in the right direction. Go from vision to imagination to focus and step-by-step concrete measurable activities.

Do a SWOT Analysis

I really like SWOT for strategy. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s about brainstorming and making lists of bullet points. Take a piece of paper or a white board for a group, and build the four lists.


SWOT is a good idea even as quiet thought for an individual, but it’s much better if you can do it in a group setting. The group improves the brainstorming value. Even if yours is just a one-person business, invite your spouse or significant other, or a few trusted friends who know your business (maybe you buy the lunch), and–if you can afford the hourly fees–your accountant or attorney. If you’re in a small business with a team, invite the team.

SWOT is about brainstorming, which is generating a lot of ideas, not just a few good ones, and then boiling them down to a strategic list. With bullet points, more is better. Make sure that during the brainstorming period you aren’t negative or critical of any ideas.

The SWOT divides in the middle between the top two lists, strengths and weaknesses, which are about your business; and the bottom two, opportunities and threats, which are about the world outside.

Strengths and weaknesses are traits of your business. You can change them over a long term, but not easily. You can improve strengths and correct weaknesses, and planning helps; but it takes hiring new people, finding new resources, training, and making an effort.

Opportunities and threats are things external to your business, out in the world at large, which you can foresee. Strategy is clearly about taking advantage of opportunities and avoiding threats.

One of the great advantages of SWOT is how easily it brings people into the process. Companies differ, but in general, your planning will work better if the people who are supposed to implement the plan are involved in its development. SWOT involves people in the plan, helping them see the strategy and making them feel like part of it.

SWOT in a small business also offers a safe forum for generating new ideas and breaking through standing assumptions.

Strategic Positioning

Positioning is to me one of the most important concepts in business strategy and tactics. It’s a critical outcome of the IMO strategy I recommend in Set Your Strategy. It’s also vital to marketing strategy, your marketing plan, and related tactics.

The essence is in this simple diagram from the Kotler Marketing Management textbook, which served a generation of MBA students. Consider positioning of the various options for an American breakfast, as originally drawn by Kotler:


With proper positioning, the business that does any one of these options stays clear on the value of its business offering and how it’s different from all others. Instant breakfast is fast and cheap, so it doesn’t compete with bacon and eggs. Positioning is the key to the buzzword of differentiation – business survives by being a big frog in a small pond. Trying to please everybody is a recipe for disaster.

Strategy is focus. And positioning puts focus on a map.

Not All Business Growth is Equal

I like this framework for looking at different kinds of business growth, in terms of capital costs and resources.


Take your possible growth efforts and classify them into the general categories shown in my drawing here. Rate each growth opportunity based on two scales:

  • On the vertical, rate each growth idea by how new the product (or service, or business offering) is, on a scale of 1 to 10 with a 1 being your existing current items and a 10 completely new business offerings you’d have to develop.
  • On the horizontal, rate each growth idea according to how well you know the target market, from a 1 for your current business market to a 10 for completely new markets you’ve never worked with before.

Growth in quadrant 3, selling existing products to existing customers, is by far the easiest. That is viewed in terms of capital requirements, resources, investment, time effort, and so on. Growth in quadrant 1, creating new products for new markets, is way more expensive.

Growth in quadrants 2 and 4 falls somewhere in between. That’s selling new things to existing customers, or finding new customers to buy existing things.

In practical terms, most businesses can finance that growth in sales of existing products to existing market through existing revenues, but most companies need outside support to develop new products for new markets.

The difference is often enormous. For example, a computer company studied 800 retail dealers over three years, and classified their growth drivers according to this simple model. Sure, this was all vague and rounded, and required a lot of educated guessing. What they found was that growth in quadrant 3 costs about $0.15 in capital per dollar of increased sales. Growth in quadrant 1 cost an average of $0.75 in capital per dollar of increased sales. Growth in Quadrants 2 and 4 varied from $0.30 to $0.55 per dollar of sales growth. Those are old numbers in one special study, so don’t take them as still valid in dollars and cents; but they’re still true conceptually. Even today, some business growth is attained much more easily than some other business growth.

And I’m not talking about sales, or costs, or expenses here: I’m talking about new capital, as in new funding. I’m talking about either investment that dilutes your ownership, or borrowing that adds to your debt. These are tough trade-offs.

It doesn’t take a lot of math or theory to figure out why; we’re human, we make mistakes. Trying to develop new markets costs a lot more because we grope a bit, do it wrong, and learn the hard (and expensive) way. Trying to develop new products is also hard and expensive. I know software pretty well. We choose the wrong platforms, we try the wrong routines, we have to stop and go back sometimes. That all adds up to costs.

And then there’s the so-called rub. If you don’t move toward new products and new markets, eventually, you go stale and the business dries up. There’s a lot of paradox in business planning.

Conclusion: make sure you address existing customers first. You can’t keep a business healthy for too long without new products and new customers, for sure; but plan your growth well.

By the way, this isn’t just my idea, although I’ve seen the practical reality of this for several decades. It isn’t my original thinking. I heard it first from another consultant. I’m told this is the Ansoff Matrix model, which was originally developed at Harvard Business School.