Vinu: Manu, as businesses grow, what are the most common financial mistakes you see?

Manu: The first mistake is growing sales without planning working capital. For example, revenue jumps from ₹8 crore to ₹12 crore, but receivables also increase from ₹2 crore to ₹4 crore, creating cash stress.

Vinu:  So growth itself can create problems?

Manu: Yes. Growth consumes cash. Many businesses underestimate how much additional funding is required to support higher turnover.

Vinu: What’s another major mistake?

Manu: Confusing profit with cash. A company may report ₹90 lakh profit, but if operating cash flow is only ₹10 lakh, it may struggle to pay EMIs and suppliers.

Vinu: How about borrowing decisions?

Manu: Over-borrowing is common. Taking a ₹5 crore term loan without matching cash generation capacity leads to repayment pressure and refinancing risk.

Vinu: Do businesses make mistakes in cost control too?

Manu: Definitely. Fixed costs rise too fast. For example, office and admin expenses increase from ₹40 lakh to ₹80 lakh within a year without revenue stability.

Vinu: What about investment decisions?

Manu: Many invest in assets without checking returns. Buying machinery for ₹3 crore while capacity utilisation remains below 60% results in poor capital efficiency.

Vinu: Any mistake related to financial reporting?

Manu: Yes. Delayed and inaccurate MIS. If management reviews numbers after 45 days, corrective action becomes too late.

Vinu: What is the biggest risk of all these mistakes combined?

Manu: Loss of financial control. Even a fast-growing business can slip into a liquidity crisis.

Vinu: Final message for growing businesses?

Manu: Grow with financial discipline. Plan cash, control costs, borrow carefully, and track performance monthly. Growth must be funded, not just celebrated.

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