I always hear people talk about what they would do with the million/multi-million dollars if they had it, but they talk as if it’s a pipe dream. Rarely do I hear how they will go about getting it or what’s stopping them from breaking through that glass ceiling. In fact, I’ll go out on a limb and say people that talk publicly about their cash or investments are just like those who post “the perfect lives” on social media.
Do you ever get the feeling that perhaps everyone is a little afraid of cash? Perhaps it’s the lack of having it that’s the problem or maybe it’s the comparative environment it creates. There is something about it that makes it such a sensitive topic.
Some think it alienates friendships or worry about how it will change them. I challenge those arguments and here’s why: “If you’re in business, aren’t you in business to make money?” Yeah, some may jump all over this with responses that “there’s more to business than money” and “I want to make an impact” and “I want to serve _____________”. All good arguments, yes, BUT 1) if you’re not in business to make money, why don’t you have a non-profit or charitable organization instead of a for-profit business and 2) wouldn’t you be able to make more impact or serve more if you had more money? Ultimately, you want more money so you can accomplish more, give more.
What’s that old saying “Cash is King”?
Cash flow is such a vital thing when you’re running a business and yet little time is spent truly managing it, especially in small-to-midsize businesses. That being said, you can’t only focus on the top line sales but have to also focus on maximizing the bottom line profits. This is what will allow you to reinvest in both your business and yourself, as well as allow you to donate to your causes.
One of the problems that exist is making judgment calls and decisions based merely on the cash balance in the bank. That, combined with the fact that the decisions are made on an “as needed, in the moment” call, can create a lot of rockiness and uncertainty for the business and the business owner.
Consider this for a moment. Let’s assume you’re a sports fan; I personally like ice hockey. You’re a huge fan, but your city’s team frustrates you because they continually play a defensive game and their offense never tries to score. Do you think they’re going to win? Do you think they’ll have any chance of advancing to the playoffs if the other teams have an offensive game?
So what’s the difference between the team that plays defensively and the team that plays offensively? The defense is in “reactive” mode, but the offense is in “proactive” mode. We can compare this to those who just operate on the bank cash balance (defensive team) to those that manage their cash flow and don’t hesitate to discuss it (offensive team).
So how do we alleviate this problem?
Here are 3 tips:
- Get over the old school “don’t discuss cash” issues; don’t look at cash as a comparison trap or status symbol, but a tool for you to be successful and advance your company to the next level.
- Create a way to have necessary financial information at your fingertips on a regular basis.
- Use the data to make key decisions and plan accordingly by anticipating your needs and resources so you get ahead of the game.