Hello security and alarm professionals,
You can grow a business fast with messy financials, but the moment you want real leverage, unclean books will slow you down or stop you entirely.
In today’s issue:
Growth Exposes Hidden Fragility
Healthy Books Will Help You Scale
Don’t Stall at $3M in Revenue
Most security and life-safety companies don’t stall because they lack hustle. They stall because they lack measurement.
In this episode of Entry & Exit, we break down exactly why so many service businesses get stuck around $3M in revenue and what it actually takes to scale past it. From annual planning to KPIs, budgeting discipline, and hiring A-players, this conversation is a practical blueprint for building a company that can grow to $5M, $10M, and beyond.
Check it all out here 👇.
Growth Tells the Story
Problems rarely show up when a business is small. They surface when scale increases complexity. More revenue means more transactions, more purchasing, more inventory, and more people touching systems that were never built for volume (this newsletter tells you how to make your business bigger than you).
What felt “good enough” at $2–3M starts quietly breaking at $8–10M.
Growth doesn’t create new problems. It reveals the ones you were already carrying. Loose purchasing controls, weak inventory tracking, manual spreadsheets, and unclear ownership stay hidden when volume is low. As activity ramps up, those gaps turn into real pain.
Friction is a signal, not a failure. It tells you which systems need to mature next. Ignore it, and scale amplifies the damage. Fix it early, and growth becomes leverage instead of stress.
Healthy Books Will Help You Scale
The overview: You can grow fast with messy financials, but leverage exposes everything.
Plenty of companies scale revenue while running loose books. Cash accounting. Manual spreadsheets. Incomplete inventory tracking. No real view into RMR, job costing, or purchasing.
That works. Until it doesn’t.
The moment you want acquisitions, senior debt, equity, or a serious exit, unclean financials stop being an inconvenience and start being a blocker. Not because the business is bad, but because it is unprepared.
Healthy companies are sellable companies. Even if you never plan to sell.
Optionality comes from treating the business like it could be sold at any time, not when you decide you want liquidity.
And that work needs to be done long before you need it.
The details: The issue is not ambition. It is financial maturity.
Many owners track revenue and net income and assume that is “good financials.” That is fine for running lean and staying cash-based. It is not enough for sophisticated capital partners.
Real leverage requires clarity across the full financial system:
Cash or accrual. Pick one. Do not be “accrual-ish.
Clean purchasing controls tied to work orders and projects.
Accurate inventory tracking across locations and vehicles.
Job costing that reflects what was actually deployed, not what was estimated.
RMR tracking that shows adds, attrition, transfers, and roll-forwards monthly.
Growth increases transaction volume. Volume exposes weak systems. Weak systems turn into painful cleanups under scrutiny.
The hardest part is timing. If you wait until you are raising capital, buying a business, or selling, you are already late. At minimum, you need a year of clean, consistent financials before outside parties get involved.
What comes next:
Pick a lane: Decide whether you are cash or accrual. Do not mix them. Half measures create distorted numbers and painful cleanups later.
Give yourself a runway: Plan for at least 12 months of clean, consistent financials before you raise debt, pursue acquisitions, or explore a sale. Waiting guarantees friction.
Install real purchasing controls: Every purchase should tie to a work order or project. Inventory must be tracked by location, not guessed at after the fact.
Build true job costing: Track what was actually bought and deployed, not what was estimated. Close projects cleanly and adjust at completion.
Track RMR like a lender would: Monthly roll-forwards showing starting balance, organic adds, inorganic adds, attrition, transfers, and ending balance are table stakes.
Tighten the close process: Define who owns month-end close, what gets reviewed, and when reports are final. Sloppy closes signal risk.
Add a second set of eyes: A bookkeeper, CPA, or fractional CFO who understands accrual can validate adjustments and create a clear narrative before outsiders ask questions.
Why it matters: There is no get-out-of-jail-free card with sophisticated financial partners.
Banks, equity groups, and buyers will retrofit your numbers to accrual whether you like it or not. If your data is messy, the deal slows down, becomes more expensive, or dies entirely.
Even worse, unprepared companies miss opportunities they should win. Fast-moving acquisitions. Favorable debt terms. Strategic partnerships. The window opens, and they cannot move.
Clean financials are not about complexity. They are about control.
When the numbers are tight, options expand. When they are not, growth becomes fragile.
Do the painful work early, or pay a much higher price when it matters most.
There’s no two ways about it. Unclean books are a hazard waiting to stall further growth. Advanced planning will help keep your books clean.
Disclosure: Some of the content and links in this newsletter are sponsored or affiliate links, which means we may receive payment or earn a commission if you click through or purchase. However, all opinions expressed are entirely my own.
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