“How’s our cash?”
I remember having a conversation one time with a successful serial entrepreneur, and he told me that those three words were the first words he asked as soon as he walked into the office. Every morning. Without fail. No “Hi.” No “How are you?” “How’s our cash?”
If you are NOT an entrepreneur and you just read that, you would think this would be one of the meanest coldest-hearted human beings that ever walked the earth (and probably a few more names for the guy that wouldn’t be fit to print).
But if you, like me, ARE an entrepreneur, then you’re 100% on board with the guy. You get it.
And by “it”, I mean “the most important thing you need to sustain a business”. Cash-flow is literally the lifeblood of a business. It’s what keeps your people paid, your goods manufactured, your marketing and advertising humming and your overall infrastructure in place. Without it, none of these happen. Period. Exclamation point. (You could even say it’s the lifeblood of this book. Consider the other chapters, and how, when you break them down to their essence, they are glorified explanations of ways to either attain or save more cash.)
And yes, I’m biased. “Of course, somebody with an certified accounting background would emphasize the importance of cash-flow,” you think. But that’s not where my bias lies. It lies in wanting to make money and to be successful.
Does this mean that you, too, need to be a CPA to run a successful business? No. (CPA’s that have gone under are sadly nodding their heads in agreement right now.) But it does mean that you need to make money management a top priority that should be addressed daily in you business. You need to know every revenue and every cost to the penny, for that is the only way that you know the baseline from which you can devise your strategy to improve on both of these.
And while simply knowing these is important, tracking these is what matters. On a monthly basis, you should establish a monthly P & L (profit and loss) statement so that you know exactly where your money is going, so that you can address the weak spots and reinforce the strong points.
Many entrepreneurs consider this a necessary evil, recognizing the importance of keeping track of the finances, but groaning every time they have to sit down and crunch the numbers. In their heads, they can be spending that time doing anything else in order to move the company forward. For me, it’s the exact opposite. I LOVE this stuff. And not just because of my CPA background. More often than not, seeing where the numbers fall in my business gives me a second wind to boost sales and cut costs. It renews my mental energy and reinvigorates my focus!
If you’re like me and want that rush of doing this yourself, then getting the proper software is a MUST. It starts with a basic spreadsheet, which you can access via the basic workplace software suites that are available for Windows (Excel) or Mac (Numbers), or even online through Google or other online office platforms.
But while having spreadsheets are good for seeing the numbers as they exist, and playing around with them to suit your needs, you need to purchase a financial management software program that puts these numbers in context, and helps make sense of exactly what is happening with your company’s finances. Go to any office or computer store, and you’ll see dozens of choices when it comes to financial management software. For my businesses, I prefer to go with the tried and true Quickbooks program. Quickbooks is simple to use, and geared exactly to small businesses like mine, given the functionality that I need without clogging me with information and metrics that I don’t need. (And if I ever DO scale up to that level, I can simply upgrade to a higher level of Quickbooks, right along with me.
But for the entrepreneurs for whom this IS a hassle, accounting, bookkeeping and general financial management are typically the first and easiest functions that a business can outsource to a licensed professional….somebody like my pre-entrepreneurial self. Finding the right financial manager at a price that won’t break your budget can be a lifesaver for a busy entrepreneur who just wants to go, go, go all the time.
It’s been said that money “is the root of all evil”, but in business, it’s the root of all you do. Treating it with the respect and reverence that it deserves should be a top-level priority as you move forward with your business.
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