Ed Weeks Jr. explains why fast-growing businesses suddenly feel broke: a 30-year-old company's customers stretched payment terms from 30 to 90 days, forcing the owner to fund operations on personal credit. Before you sell, calculate your cash conversion gap, total float, and trailing-12-month EBITDA to know if you can grow or need to exit.
This owner runs a company you, my friend, would kill to own. It's booming, biggest contracts of his career, and it's quietly bankrupting him. In the next few minutes, I'm going to show you exactly how that happens and the one number that tells you if it's happening to you too. I'm Ed Weeks Jr. I help Gen X operators grow get funded and exit from their businesses and exit well. Let's get into today's episode. Yesterday, I got on a call with a guy who's been building his company for 30 years. He started really young, senior in high school, did it the hard way. I have 5, 6 friends just like this guy. Right now, after all this time, he He's on the best run of his career. He's got over 150 people on the payroll. He's winning work his competitors, they can't even qualify to bid on it. The first thing he told me within 5 seconds, hey, Ed, I'm not for sale. I believe the guy. Then, he went on a tangent. He spent 20 minutes explaining why he might actually have to be for sale. Here's what's happening. His biggest customers, the blue-chip names, quietly moved their payment terms. They went from 30 days to 90, which I'll explain to you is actually a lot longer. Let's watch the money. He starts a job, shovels in the ground. He's paying his crew immediately, pays them weekly. His suppliers, he pays them in 30 days. But he can't invoice his customer until the work hits a milestone. In this situation, it's 30 days. Then the customer takes another 90 days to pay him. That's 120 days funding the entire job out of his own pocket before a single dollar comes back. On a big project, that's $5 to $10 million floating On his personal. Yes, because he's personally guaranteed the business credit line. It's floating on his personal credit line. His words, you basically have to have big money to get money anymore. Now, here's the part that flips everything. The business, it's not failing. It's succeeding faster than the structure underneath it can carry. The thing pushing this man towards selling isn't weakness. It's actually his own growth. He doesn't have a sell problem. He has a money timing problem wearing a sell problems clothes. This is the conversation I've had several times in May, and now I'm starting June with the same conversation. It always comes down to one fork, that damn fork in the road. Do you need capital to keep climbing, or is it time to position for an exit? Road 1, you stay in the chair, you get funded properly, you keep growing on your terms. Road 2, you get the best price for what you built and you walk away clean. The trap is most owners don't even know Road 2 exists as a planned option. They think, oh, my kids are going to take it over. That happens all the time. And most don't even realize they're standing at this fork at all. They just feel the squeeze and assume, hell, it's normal. Here's the thing, it's not normal. It's a decision. And funding your own growth at 120 days while calling it the cost of doing business is the decision you're making by accident. 2 more things from this call that quietly cost owners a fortune. One, I asked him a simple question. What's your EBITDA? He said, I don't know, never had a look. $30 mil in revenue, 30 years, and the one number every buyer cares about most, he never pulled. The day you raise money or sell, the number you can't show is the value you won't get credit for. Buyers don't pay for the business you describe. They pay for the one you can actually prove. 2, the whole company runs through him. I know he's got 150 employees, but listen, the big jobs, the key relationships, it's all him. That's exactly why another buyer wanted him locked in for 5 years. That's not a compliment. That's a hedge. If your business can't run without you, you didn't build a company. You built a job that owns you. And a job is worth a lot less. So, here's your move this week. Pull 3 numbers. Call your CFO if you have one. Call your CPA if you need to. The first number you need, your cash conversion gap. Days from when you pay out to when you collect. 2, your total float, money tied up right now across every active job. And number 3, your trailing 12 months EBITDA. You don't know it, it's your first red flag and your first phone call. Those 3 numbers tell you the size of the squeeze, whether you're fundable, whether you're sellable, And which fork you're really on. Most owners never run these until a banker or a buyer forces it, and then by then they're reacting. The ones who win know their numbers cold and pick their lane on offense. Know your number, know your options, then press on. Fight ball, my friends. Fuck it, press on. If you want help figuring out which fork you're on, The link's in the description. And if this was useful, please, please, please subscribe because next week I'm breaking down that EBITDA mistake and exactly what it costs you at the closing table. Peace, everybody.
