There is a saying in business: companies do not fail because they run out of ideas. They fail because they run out of cash.
The numbers back it up. Research shows that 82 percent of small business failures are tied directly to poor cash flow management. In Australia, Xero’s Small Business Insights revealed that 43 percent of small firms struggle with cash flow at least once a year, with late customer payments a major culprit.
For business owners in Perth, this reality is all too familiar. Whether you run a construction company juggling project payments, a professional services firm waiting on clients, or a mining services supplier dealing with long billing cycles, the same pressure applies. Growth can be exciting – but it can also starve your business of the very oxygen it needs to survive.
The Hidden Danger of Growth
Growth feels good. New clients, bigger contracts, expanding teams. But here’s the paradox: growth often eats cash faster than it creates it.
Imagine winning a big project. You need to hire staff, buy supplies, and cover overheads before the first invoice is ever paid. If receivables are delayed or suppliers tighten their terms, suddenly that win feels like a cash crisis.
This is why Scaling Up treats cash as one of the four critical decisions (alongside People, Strategy, and Execution). Without it, nothing else moves. The key is not waiting until you are desperate to improve cash flow. It is about building breathing room before you need it.
Introducing the Power of One
Scaling Up uses a tool called the Power of One. It asks a simple question: what happens if you adjust seven key financial levers by just one or two percent?
The seven levers are:
- Price
- Volume
- Cost of goods sold (COGS)
- Operating expenses
- Receivables
- Payables
- Inventory
Individually, these changes look small. But together, they create a compounding effect that can significantly lift cash flow within 90 days.
The Seven Levers Explained
Let’s look at each lever more closely.
Price – Even a small increase changes your margins overnight. A 1 percent increase in price, if managed carefully, drops straight to the bottom line without adding cost.
Volume – This is not just about selling more. It is about selling the right mix of products or services that maximise margin. A smarter sales mix often produces more cash than sheer volume.
Cost of Goods Sold (COGS) – How efficiently you buy or produce what you sell. Negotiating better supplier deals, reducing waste, or streamlining production can free up significant cash.
Operating Expenses – Overheads have a way of creeping up. Tightening unnecessary subscriptions, renegotiating leases, or automating simple tasks can reduce costs without cutting into growth.
Receivables – Cash tied up in unpaid invoices is one of the biggest issues Perth businesses face. Setting clear payment terms, following up quickly, and offering small discounts for early payments can shorten collection cycles.
Payables – On the other side, negotiating longer payment terms with suppliers (without damaging relationships) stretches your cash further. Many businesses fail to ask, even though suppliers are often open to adjusting terms for reliable clients.
Inventory – Too much stock ties up working capital. By improving forecasting and reducing excess inventory, you can release cash that is otherwise gathering dust on a shelf.
Why Small Changes Matter
A one percent change sounds tiny. But think of it this way:
- Raise average invoice value by 2 percent.
- Cut supplier costs by 1 percent.
- Collect receivables five days faster.
None of these moves will make headlines. But combined, they can add up to hundreds of thousands – or even millions – in improved cash flow over a year. That money can fund growth, reduce reliance on bank loans, or provide a buffer against market shocks.
A Perth Example
Consider a Perth-based professional services firm. They were profitable on paper but constantly struggled with cash in the bank. By making three simple moves, they changed their trajectory:
- Increased average invoice value by 2 percent by bundling services into packages.
- Renegotiated with key suppliers to reduce costs by 1 percent.
- Implemented a tighter receivables process, reducing average days to payment from 45 to 38.
The result was a significant increase in cash flow within one quarter. It was not magic. It was method.
Why It Matters for Perth Businesses
The Perth economy is shaped by industries with long project cycles – construction, mining, and professional services. These sectors are particularly vulnerable to cash crunches because expenses often come well before income.
Without proactive cash management, businesses are forced into short-term fixes: chasing loans, cutting staff, or delaying investments. That not only slows growth, it undermines confidence with staff and clients.
By applying the Power of One, Perth businesses can avoid these traps. Instead of scrambling for cash when it is too late, they create steady breathing room and position themselves for sustainable growth.
How to Start
The best way to begin is with an audit. Map out each of the seven levers and ask:
- Where can we increase or decrease by just 1 or 2 percent?
- Which lever will have the fastest impact this quarter?
- Who owns the action, and how will we measure progress weekly?
Pick one lever to focus on. Make it visible. Track it. Once the improvement sticks, move to the next. Over time, the compounding effect creates significant cash resilience.
Cash as Oxygen
Cash is not just a financial metric. It is oxygen. Without it, even the best ideas and strategies suffocate. With it, businesses breathe easier, invest with confidence, and ride out turbulence.
For Perth business owners, mastering cash flow is not optional. It is the foundation for growth. And the good news is, you do not need radical reinvention. You just need small, disciplined shifts across the seven levers. That is the power of one.
At Rolling Start, we help Perth entrepreneurs and leaders use Scaling Up tools to take control of their cash flow. By focusing on small, deliberate changes, we help you create the breathing room your business needs to thrive.
If you are ready to strengthen your cash position before it becomes a crisis, contact Rolling Start today. Let’s build the financial foundation that supports your next stage of growth.