A Cash Trap Can Take Over Your Dream

Posted by Rock LaManna

Cash Trap Case Study - Rock Lamanna - LaManna AllianceImagine you’re a commercial printer who dreams of the higher margins of wide-format digital printing. You decide to sell your business and move entirely into wide-format digital printing.

You think it’s a smart move. Your current book of business is big and relatively successful. You have a lot of local, repeat clients. You understand what it takes to build a business.

You then sell and open your wide-format business. What could go wrong? Guess what? You’ve fallen into a cash trap and made some common mistakes.

No Contracts in Place

It’s one thing to have faith in your ability and your marketing plan. But without guaranteed cash flow, there’s little chance that your business will succeed.

Without ironclad contracts, before you make the switch, your cash flow will suffer. Maybe you'll run out of money.

You Didn't Leverage Your Former Business as a Springboard

You had a steady cash flow with your old company. While you may have gotten bored with it, you gave up a sure thing to go all-in for something new. You've traded certainty for stress.

Why not use your existing business to help you maintain cash flow and slowly make the transition. Later, you can decide to sell the old business, when the new one is a proven company.

A Cash Trap Catches People Who Don't Know Their Strengths

While there are many similarities between wide-screen digital formatting and commercial printing, there are many differences.  To assume you can start from scratch and have no learning curve is a big mistake. You’ll struggle and not have time to learn the new business.

Rock, What's Next?

Stop investing entirely and maximize your business for cash. Or invest heavily and try to gain enough market share and revenue to resume a healthy cash flow.

Neither option is attractive. Doesn’t it make more sense to avoid the cash trap entirely? Start with analyzing your current cash flow. Your analysis must answer two critical questions:

  • At what point in time does my cash flow allow me to acquire a new piece of equipment that allows me to pursue my dream?
  • What is the best way to acquire it?

Answer those two questions accurately, and you'll avoid the cash trap. It’s not very complicated. Know your numbers and be honest about what you can achieve. 


Topics: Business Development, Printing Industry