4 Pillars of Growth

The 4 Pillars of Growth are

1. Management onboarding & rate of change
2. Operating cash flow
3. Net debt
4. Net equity

We believe the ultimate limitation ought to be people. If you have a people limit –and you go beyond it– you can destroy your company. If your top people (yourself included) are not learning animals then you cannot go faster than they can handle. Even with a high rate of change, you must still onboard more people to help you grow. And, with that you will need management capacity. How much? And when? This will depend on some other factors.

Operating cash provides tangible profits that you can reinvest. You can also borrow against this or use it to buy back shares. More is almost always better, save for the reality that competitors may encroach, ultimately slowing growth as customers find alternatives.

Debt is available to those with tangible assets and positive cash flow. This non-dilutive source of capital is faster, cheaper and easier than raising equity. So long as you do not over do it, this is a common source of growth capital. However, be careful as too much debt can sink you with a small hiccup of operating cash flow.

Net equity raising invites others into your partnership, whereas net buy backs reduce outstanding shares and concentrate ownership on the remaining owners. If you are distributing cash to owners through buy backs or dividends you may slow growth. This can be intelligent if there are not adequate places to deploy profits. Leaders differ in their opinions about raising outside equity.

With all four pillars in alignment the growth per share can be managed.