Revenue doubled. Cash halved.
The CEO couldn’t figure it out. “We’re winning,” he kept saying. “Look at the numbers.” He meant the top line. The board deck showed 40% growth, new logos, expanding team. By every metric that gets celebrated at all-hands meetings, they were crushing it.
But the distributions kept shrinking. And then they stopped entirely. And then the line of credit started climbing. And then the controller quit.
By the time I got the call, they were three weeks from missing payroll. A $23M company, six years old, 85 employees—and they couldn’t make the Friday deposit without the Wednesday collection landing first.
They weren’t failing. They were succeeding themselves to death.
The Math Nobody Wants to Do
Here’s how it happens:
You win a big deal. Great news. But to win it, you extended payment terms to net-60. And you agreed to some customization that isn’t in the contract. And you hired two people to support it before the ink was dry.
So the revenue shows up… in 60 days. The costs show up immediately. The profit shows up… eventually. Maybe.
Do that ten times and you have a growing company with a shrinking bank account. Do it fifty times and you have a crisis that looks like it came out of nowhere but was actually built one “win” at a time.
The CEO I mentioned? His average deal size had grown 35% in two years. His average collection time had grown 80%. His cost to deliver had grown 60%. The deals looked bigger. The margins were actually smaller. But nobody tracked that, because revenue growth was the number on the wall.
The Hiring Trap
“We have to hire ahead of the curve.”
I’ve heard this maybe a hundred times. And it’s true—sometimes. But more often it’s a rationalization for building a cost structure based on hope.
Here’s what usually happens: Leadership projects 30% growth. They hire to support 30% growth. The growth comes in at 18%. Now they have a team sized for a company that doesn’t exist, burning cash to support revenue that isn’t there.
The fix, in theory, is to cut. But by the time the miss is obvious, six months have passed. The new hires have been trained, integrated, given clients. Cutting them means disruption, severance, morale damage. So instead, leadership decides to “grow into the cost structure.” Which means more aggressive sales targets. Which means more discounting to close deals. Which means worse margins. Which means the cash problem gets worse, not better.
I watched one company do this three years in a row. Each year, the plan was to grow into last year’s cost structure. Each year, they added more cost structure to grow into. They went from profitable to break-even to burning $400K a month without ever having a down year in revenue.
The Scope Creep Tax
The deals that look best on paper are often the worst for cash.
A client of mine—professional services firm, $18M—landed their biggest contract ever. $2.1M annual, three-year term. The champagne came out. The announcement went to the whole company.
Eighteen months later, that client was responsible for 40% of the firm’s revenue and negative margin.
How? Scope creep. The contract said one thing. The relationship required another. The client expected a level of service that wasn’t priced in. And because they were the biggest client, nobody wanted to push back. Every request got accommodated. Every “quick favor” got absorbed. The team working that account grew from four people to eleven. The contract didn’t.
The firm was growing. The firm was also going broke. The same client was responsible for both.
What You’re Not Tracking
Most companies track revenue. Fewer track margin by customer. Almost none track cash generation by customer.
That matters because a customer who pays in 30 days at 40% margin is worth roughly twice as much as a customer who pays in 90 days at 40% margin. Same margin. Completely different cash impact. But if you only track margin, they look identical.
The growing broke pattern usually hides in the places you’re not looking:
Which customers actually generate cash, after fully-loaded cost to serve?
Which deals require negative cash flow for 90+ days before you see a dollar?
Which service lines look profitable but consume working capital faster than they generate it?
When I ask these questions, most CEOs don’t know. Not because they’re not smart. Because their systems don’t produce the answers.
The Planning Rhythm Fix
Growing broke is a Planning Rhythm problem. You’re making decisions about the future based on incomplete information about how those decisions affect cash.
The fix isn’t complicated, but it requires discipline:
A 13-week cash forecast that shows where you’ll actually land, not where the budget says you should land.
Unit economics by customer segment—not just overall margin, but margin and cash impact by the type of work you do and the type of customer you serve.
Scenario modeling before you commit. “If we hire ahead of this deal, what happens to cash if the deal slips 90 days? What if it closes but at 15% lower margin? What if we win it and they pay slow?”
This isn’t about being conservative. It’s about making growth decisions with full information instead of partial information. The companies that grow profitably aren’t less ambitious. They’re more honest about the cash math.
The Uncomfortable Part
Some companies are too far gone.
If you’re three weeks from missing payroll, the Planning Rhythm conversation isn’t going to help you. You need triage—Foundation Rhythm work to stabilize cash and create visibility. The strategic conversation comes after you’ve stopped the bleeding.
And some companies have built their entire growth model on unit economics that don’t work. They’ve been subsidizing customers for years. They’ve hired for a company that can’t exist profitably. The path back requires more than new forecasting tools. It requires hard choices about what to stop doing.
I can usually tell in the first conversation whether a company is dealing with a visibility problem or a model problem. Visibility problems are fixable in 90 days. Model problems take longer and hurt more.
The Question
Revenue is up. Is cash up too?
If you can’t answer that immediately—if you need to check, or calculate, or ask someone—you’re operating in the zone where growing broke happens.
The paradox isn’t complicated: growth that consumes more cash than it generates isn’t growth. It’s a countdown. The countdown might last years. But it’s still counting.
The companies that win are the ones who figure this out before the countdown hits zero.
