Everyone knows that starting a business requires cash, and growing a business requires even more—for working capital, facilities and equipment, and operating expenses. But few people understand that a profitable company that tries to grow too fast can run out of cash—even if its products are great successes. A key challenge for managers of any growing concern, then, is to strike the proper balance between consuming cash and generating it. Fail to strike that balance, and even a thriving company can soon find itself out of business—a victim of its own success.

A version of this article appeared in the May 2001 issue of Harvard Business Review.