6

The Liquidity Crash

Who can forget Liza Minnelli and Joel Grey in the 1972 musical film Cabaret singing that “Money makes the world go ’round”? Money also makes business go ’round, but when it runs out, we feel the jolt as operations screech to a halt. Embarrassing and cataclysmic, running out of money—a liquidity crash—utterly consumes the business’s attention.

Everything has to wait until the money problem is solved. Indeed, distraction may be the most devastating consequence of running out of money: it keeps everyone, especially the CEO, from attending to the business’s business. And that’s not good.

The liquidity crash is the sixth silent killer of midsized company growth.

This chapter will take you through some of the root causes of illiquidity; ...

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