I want you to think about cash for a few minutes. I want you to know that it means you need to keep cash on hand so when the inevitable rainy day comes along you don’t run short on cash.
I know you’ve heard this saying, “Cash is King.” And the truth is, it is.
Here’s a news flash for you. You need cash to run your business. If you agree with that really stupid statement, then why don’t you know how to read your cash flow statement? OK, well it won’t be all of you…..a few of you will know how to read it.
I’m amazed at the number of business owners who think the only statement they have to pay attention to is their profit and loss statement. I’m hoping that you’re not one of them.
Actually this argument stopped about twenty-five years ago. But, for the first ten years I was in business I focused on growth and my father kept saying that was the wrong metric.
I learned the hard way that profits don’t equal cash. When I first started in the vending business I was all of 24 years old. The first few years were great. We added a ton of business and our profits were strong.
I thought I had figured it all out. Then, as often happens when you own a business, the Universe thought it had a better idea for me. I learned that profits and cash are two very different things.
If someone asks you how you are going to grow your business I bet your answer will be explaining how you’re going to grow sales. For most that’s the answer. Sometimes it makes sense to look at another option. Instead of growing sales how about growing profits?
Does it always make sense to make your business bigger?