In June 2017, Canadian Danielle Simpson found herself living with her new partner in Berlin, Germany. Stuck at home and with little in the way of a social network in Germany, Simpson decided to teach English as a second language.
Simpson’s partner Arvid Kahl noticed her struggling to complete feedback reports about the students. Most of Simpson’s report cards were similar, yet she had to waste hours re-typing identical messages about dozens of students every night.
Kahl, a software engineer, saw a process ripe for automation and built a little tool that allows a teacher to select from a list of pre-scripted student feedback options and accelerate the process of providing comments about students.
Kahl and Simpson reasoned the tool might help other English teachers and offered it on a subscription basis through a Facebook group set up for ex-pat teachers. Two years later, the company had crested $50,000 per month in recurring revenue with almost no direct cost when they decided to accept SureSwift Capital’s offer to buy their business in a life-changing transaction for the couple.
Kahl and Simpson never raised money for their business in part because they charged upfront for a year’s worth of service which gave them the cash to grow (and hang on to their equity).
The best practice is to measure your cash conversion cycle at least twice a year to inform how to move from negative cash flow to positive results.
Do you know your cash conversion cycle number?
Contact Kirk W. McLaren, CEO, MBA, CPA, IFM, and Georgetown University lecturer at kirk@foresightcfo.com to learn how the eight drivers help you grow with clarity.