Growth is great, until it creates a cash crunch, forces bad borrowing, or overwhelms your team.
That is what this last part of the Rules as Tools series is about.
Because the moment you step on the growth lever, the business starts asking you for money faster than it hands you money.
A business owner I recently spoke to had about $1M sitting in accounts receivable. On paper, they were fine. But their line of credit was still sized for the old revenue level, so the borrowing base did not keep up.
Then they bought a truck, the LOC was basically maxed, and suddenly the owner felt like they were running out of air.
Nothing was wrong with demand. The system just could not fund the gap between spending today and collecting later.
In the first two parts of this series, we built the foundation:
- Clarity + Safety: what numbers to trust and how to avoid cash surprises (read it here)
- Reward + Decision: how to get paid on purpose and avoid regretful commitments (read it here)
Now we’re talking about the moment most businesses break: growth and capital.
Because growth usually shows up as:
- hiring before the revenue is stable
- expanding scope without pricing discipline
- adding tools and subscriptions “because we need it”
- taking debt because it feels like oxygen
These rules make growth a planned project, not an emotional reaction.
In a healthy business, growth is funded on purpose.
In an unhealthy business, growth is funded by:
- delaying taxes
- stretching payables
- hoping AR comes in
- or grabbing debt without a repayment plan
The point of these rules is to turn growth into a repeatable process you can run every quarter.
GROWTH + CAPITAL RULES (SO GROWTH DOESN’T KILL YOU)
Growth and capital rules answer: how do we scale (and use debt) without turning growth into chaos?
Growth often creates a cash crunch before it creates a payday. Debt can help, but only if it’s planned.
These rules make expansion deliberate, keep borrowing capacity available for real needs, and create an “order of operations” so surplus cash gets deployed intentionally instead of emotionally.
12) THE PLANNED GROWTH RULE (NO WHIM EXPANSION)
Rule: No new initiative gets approved on a whim. It must go through the process.
The process must include:
- cash impact
- capacity impact
- timeline
- downside plan (“what breaks if this is wrong?”)
What this looks like in practice: A one-page growth memo. If you can’t write the one-pager, you’re not ready to spend money on it.
Implementation: Require the one-pager for any initiative over $X or any initiative that adds a recurring cost (headcount, software, contractor).
Suggested one-pager sections:
- What are we doing (one sentence)?
- Why now (why not later)?
- What does success look like (metric + date)?
- Cash impact (best case / worst case)
- Capacity impact (who owns it; what gets deprioritized)
- Exit plan (how we unwind if wrong)
Related reading:
13) THE DEBT ONLY WITH A PLAN RULE
Rule: We don’t take debt because it’s easy. We take debt because it’s planned.
What this solves: Borrowing under stress, at bad terms, for the wrong reasons.
Example: If you can’t write how debt gets repaid (and what happens if the plan misses), it’s not a plan. It’s hope.
Debt checklist (minimum):
- Purpose (working capital? equipment? acquisition? bridge?)
- Repayment source (what cash flow pays it back?)
- Cushion (what happens if collections slip or revenue drops 10–20%?)
- Covenant/constraints (what do you lose flexibility on?)
Rule of thumb: If the repayment source is “future growth,” that’s not a source — that’s a story. Write the actual cash flow line that pays it.
Related reading:
14) THE ORDER OF OPERATIONS RULE (SURPLUS CASH HAS A SEQUENCE)
Rule: Surplus cash follows a preset order so you don’t renegotiate every month.
Default sequence (adjust to fit):
- Tax true-up
- Reserves to target
- Replacement / planned capex funding
- QOL distribution
- Highest ROI reinvestment
- Diversification / set-aside
Why it matters: Without an order, every month becomes a debate — and debates are where emotion beats strategy.
Implementation: Write your order down, put it in your monthly close checklist, and treat deviations as “exceptions” that need a reason.
Helpful question: “If we spend this surplus now, what future obligation are we creating?”
Related reading:
15) THE QUARTERLY CLEANUP RULE (KILL ZOMBIE SPEND)
Rule: Once per quarter, cancel tools, prune projects, renegotiate terms, and remove recurring clutter.
What this solves: Death by a thousand subscriptions and “projects that never die.”
Example checklist:
- Subscriptions and software audit
- Vendor pricing review
- Recurring expenses >$250/mo: justify or remove
- Projects with no owner: kill or assign
Implementation tip: Put the cleanup on the calendar as a recurring meeting. If it’s not scheduled, it doesn’t happen.
What to look for:
- tools nobody uses
- projects that don’t ship
- recurring costs that grew quietly
- vendors you never renegotiated after year 1
Related reading:
KEEP IT SIMPLE
If you want the shortest possible version of this series, here’s the punchline:
- Clarity + Safety rules keep you from getting surprised.
- Reward + Decision rules keep you from resenting your business (or making regretful commitments).
- Growth + Capital rules keep expansion from becoming expensive chaos.
If you want to keep this simple, here’s your default cadence:
- Weekly: AR meeting (cash collections)
- Monthly: Distributable Cash + tax transfer + owner pay/distributions
- Quarterly: cleanup + growth planning review
That cadence is what turns “rules” into habits.
I hope that you found these helpful!
Pause right now, and reply to this email and answer: what is one “rule” you’re going to implement for you and your business?
Next week, I’m excited about the series we’re starting. I won’t spoil it, but you won’t want to miss it.
