Cash is King.
Cash, cash flows and cash balances, makes and keeps you king of your business. Positive cash flows and positive cash balances give you ownership of your company, control of your destiny.
Here are 4 steps I learned and followed as retail prices dropped by over 70% and still we found steps, albeit with a few scrubbed knees, to grow revenues by 80% and maintain positive cash flows and cash balances.
1. Sign the checks yourself.
Every check. Big or small. Make sure you sign them. That means you and only you.
This seems obvious. But many small companies allow their book keeper or accountant to sign the checks. Don’t. This creates a fundamental disconnect between your decisions and their costs. It is one thing to agree to buy a new server and see its price on your computer screen. That number and its impact become more real with the check you sign for its payment. And the connection between your decision and its cost and impact on your cash balances and cash flows grows stronger with each check you sign.
Sign the checks yourself.
Disclaimer: I have at times offered that option to the bookkeeper when a check needed a signature and I was away from the office. But I was blessed with an excellent bookkeeper, whose husband was a CMA, and said ‘no’. I’m glad she did.
2. Look at cash balances very regularly.
How regularly depends on your company’s situation. If you’re in dire straits, then you need to make that very regularly. A company in bankruptcy will look at their cash balances throughout the day.
I know of companies not in bankruptcy who manage their business daily, if not hourly, by their cash balances. Their company survives, but does not thrive. They have no time to look to the future much less plan for it.
I looked at our cash-balances monthly.
Why? If you sign each of the checks then what is the point?
- you see a bigger picture of the results
- this serves as a simple cross-check confirmation
- cash has been known to leave a company without a CEO’s approval even when he signs the checks.
3. Look very closely at your cash flow statements regularly.
I looked at our preliminary cash flow statements monthly. I reviewed, compared with previous quarterly results and discussed them in great detail with executives on a quarterly basis. That included my signing off on their results and their impact.
Those last two sentences are key. That gave ownership and accountability. Sometimes it gave great satisfaction. Sometimes, not. Given the disruption in our industry, it spurred changes in all areas of our operations and marketing. Doing the same thing and expecting different results in an industry changing as rapidly as ours would clearly not work. These last two sentences made that very clear every 90 days. Also made clear were the changes we implemented and their impact. They pointed us in the right direction, kept us pointed in the right direction, every 90 days.
4. Talk about cash with your organization
Disclaimer: I’m not a fan of open management where you share salary and bonus amounts.
Talk about cash and its role in your organization’s success. Talk about it in ways and terms that are meaningful to your members. Show what allows. Show what its absence prohibits. Do this for them and their world: their work, their tools and resources, their chance to grow. Incentivize with rewards meaningful to your members for reaching goals with cash balances and cash flows.
An old saying goes What we put our attention on grows stronger in our lives. Putting your attention on cash with these steps makes cash and its opportunities grow stronger in our lives.