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Every Sunday, we tell you 1 tactic other companies used to scale their business.
Read Time: 7.8 Minutes
Happy Sunday Operators ⚙️
I wrote this article on a MacBook this weekend. I love my Macbook.
In comparison, Dell computers are bland. Terrible to look at if we're being honest.
Dell also helped Michael Dell to a $90 billion net worth.
Dell was a shooting star in the 90’s. However, there's an often-overlooked chapter in the company's history.
The company (almost) collapsed.
Here's how a young Michael Dell, with the help of his newly hired COO, corrected their financial mismanagement.
Setting the Stage
Dell’s Capital Crisis
It was 1986, and Dell (then called PC's Limited) was a fledgling startup that had already hit $52 million in sales. All within 3 years.
Yet behind the impressive revenue figures, the company was grappling with a harsh reality. Dell had a mere $300,000 in cash on hand. Dell admitted himself that,
That spring I was so busy running my own new company that I had no idea how close to real financial trouble we were.
All kinds of operational nightmares started to pop up like:
Receivables were piling up
Unpaid Suppliers were clamoring to at the door
A once-supportive bank had frozen Dell's credit line at $600,000 (sum that would cover just six days' worth of sales)
Facing a liquidity crisis, 21-year-old Michael Dell pulled off a coup by recruiting Lee Walker. Lee Walker was a 45-year-old veteran with a record of raising capital and turning companies around.
What happened next was a masterclass by Lee.
From using credit card sales and special deals with suppliers to keep inventory and unpaid bills low, to smart moves that opened up new lines of credit, Michael Dell and Lee Walker used every trick in the book to keep the company's cash flowing.
Ops Tactic: Predicting liquidity issues is key for any operator. You never know when you’ll need cash on hand.
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