Working capital can help firms develop

Working capital can be the key for owners of medium-sized businesses who want to take their firms to the next level.

David Guernsey told Forbes.com how he overcame cash flow problems by borrowing $8 million from a variety of sources to use for storage space, delivery vans and tech infrastructure for his business.

His idea was to keep inventory in one central location and increase the number of internet-based sales.

"What I borrowed far exceeded my net worth. It was scary, but we needed a new level of sophistication to serve larger customers in order to grow," he told the news source.

For Guernsey, the risk was worth it and the investment helped him market his product toward larger businesses, raising revenue from $5 million to $25 million over five years.

Forbes.com suggests that organizations looking to grow in this way should look at putting "smart systems" in place, such as creating an attorney-approved employee handbook, upgrading their accounting system and hiring additional managers.

Businesses should set out specific, measurable, assignable, realistic and time-bound (SMART) goals to guide their vision, it adds.