Wealth Management And Cash Flow Tips For Small Businesses

Benjamins Baby

 

Sometimes there are great differences in where we want our businesses to go, and how we manage our wealth so that they arrive at that destination.

No matter how large we’d like to grow our businesses, they to have a starting place, and an accompanying plan for growth.

Many small business owners and entrepreneurs tend to make some mistakes when it comes to deciding which investment (or investments) are best for them.  This article has been provided by Ernie Brown MBA-DCFS.  Read through for some great philosophy and practical advice to keep your business on course.

Working Capital for Small Business: The foundation …

 

With 80% +/- of small businesses failures happening because they lack working capital or because their business capitalization plan didn’t work once they started up and started selling they also fail due to a lack of planning originating from their owner making decisions that were:

  • Emotion based vs. Objective … or better said: Not financial or market based
  • Want based vs. Need based
  • Advice based from someone with little to no practical experience in business

Much of business success is intuitive HOWEVER most of it is objectively founded based on that intuition so somewhere along the line vision and logic need to blend together so …

  • First off: When you are starting up you are on a “cash flow” diet … accept it and get over it!
  • Second: Your resources are limited to what you have … you cannot spend “tomorrow”
  • Thirdly: Grow your sales and grow your assets and collateral … or get in line for the poor farm!
  • Fourth: A business without a well thought out plan has the odds stacked against it to fail – miserably!!!

A most common failure: Many business owners, right out of the gate, want to flash the BMW and the Rolex … but if it taxes the business you might lose it all. Accept this concept: When you are starting up you don’t own your business … IT OWNS YOU!

FOLKS: I’d rather be eating oatmeal … and I have and sometimes still do when it’s appropriate … and know that I can react to an opportunity vs. having to let that opportunity go by the wayside because I was frivolous with my assets. Being “lucky” isn’t just a matter of being in the right place at the right time … it’s a matter of being ready when you are in the right place at the right time.

That said I always keep a bumper of working capital or that extra availability with my credit line intead of spending it but I will also admit: I’ve been to the edge of the precipice many times and probably will again … but that’s what makes being an entrpreneur all that it is and damned do I love it!

What is the secret to making it? Grit and common sense … and mostly the latter. All too often business owners are not realistic in what they envision:

  • Financial: They don’t assess what they really need to make it happen
  • Market: They don’t really understand the market challenges they are attempting to enter
  • Business Operation: They have no clue how to run a business

Sadly: They are passionate – and then some; they are great people – and then some; but they didn’t assess what they were doing or where they were going. I call this the “SUNSET SYNDROME” … where a person envisions themselves bathing in the majesty of the sunset and trip over the sidewalk at their feet because they didn’t even assess their first step. Think on this …

Business success for some might be a quick leap that just happens and God Bless those that come about it that way but for the majority it’s a series of baby steps and short term goals that build up and grow and suddenly you’re there. If not? Hopefully you’re still safe and sound.

Think on these things … and be careful not to fall because you’re day dreaming about where you could be instead of knowing where you are!

Sound advice for our wealth management strategies.  Setting goals and actually taking action is a huge part of stepping in the right direction.

It’s easy to get wrapped up in the excitement of our dreams, and very easy to let them get in the way of making progress.  Learning the disciplines to keep us on target is crucial.  

Let’s hear what you think.  Have you ever put your wants in front of your needs (in business or your personal life)?  Leave a comment below and let us know…

 

 

Photo by AMagill

16 thoughts on “Wealth Management And Cash Flow Tips For Small Businesses

  1. Jason Fonceca

    Ever? I’ve done it over and over like a complete moron.

    My first guest post on Danny Iny’s FirepoleMarketing.com was called “8 Failed Businesses In 6 Years” and it is no joke, and not for the faint of heart.

    http://www.firepolemarketing.com/blog/2011/12/13/8-failed-businesses-in-6-years/

    (It got really great discussion though, and has a moral.)

    At the same time… nothing really, truly… “bad” happened from it. Yes, it was intense. Yes, I learned a lot in a short time. Yes, most people would avoid my path like the plague… but followng my heart helped me embody some very important things that simply ‘reading’ probably wouldn’t have done.

    (Or maybe I’m just justifyin’ :P)

    Great, great, great post, filled with wisdom — skip the path I took, listen to Jason Anthony, he speaks goodness.

    Reply
    1. Jason Anthony Post author

      Thanks, J! In my honest opinion, there’s no such thing as failure. Just results. Whether they are good or bad is irrelevant. What matters is what we do with them.

      Reply
  2. Jeanne

    I think putting our wants in front of our needs is a common mistake for newly-minted entrepreneurs. Thus most of us fail our first time out of the gate . . . then we realize the mistake and make adjustments . . . and we might fail AGAIN . . . because we fail to realize that it’s not OUR needs that we need to fulfill, but our CUSTOMER’s needs.

    So each failure gets us one step closer to our goal. Most of us will fail . . . several times . . . before we succeed. You just have to make sure you have a strong safety net/support system to catch you when you do. And then you pick yourself right back up and start again, each time stronger than the time before.

    Reply
    1. Jason Anthony Post author

      Great wisdom here. There are so many extremely successful individuals out there and most of them will all tell you the same thing. That it just didn’t land in there lap. Thanks for your comment, Jeanne!

      Reply
  3. Tom Treanor

    Jason and Ernie,

    Great post and I agree that many entrepreneurs focus on their emotion-based objectives. I’ll admit that I’ve had some moments of that in my journey. Setting goals and following through on the actions to meet them is critical. Thanks for the article!

    Reply
  4. Gemma Thompson (@GemLThompson)

    Thanks for sharing this post, I had to close a business last year due to cashflow problems, according to our books we were doing really well but our problem was non-payment by certain customers. We chose to fold rather than endanger our suppliers and I’m glad we did – but boy did we learn a lot from the experience!
    Although we weren’t frivolous with our money we could have been a bit more cautious a bit sooner.

    Reply
    1. Jason Anthony Post author

      I’m glad you were able to take and see that event as an opportunity, Gemma. Caution is tricky sometimes. We have to exercise the right amount of it at all times, while not being too overly concerned. Thanks for reading!

      Reply
  5. Timo Kiander

    Jason,

    I’m in a process of starting my business later this year and this post is something I need to read time and time again.

    Especially this sentence was/is very powerful: “When you are starting up you don’t own your business … IT OWNS YOU!”

    I have a gut feeling that we who are starting a business (especially for the first time) may not remember or even understand.

    I’m happy to get this reminder early enough 🙂

    Cheers,
    Timo

    Reply
    1. Jason Anthony Post author

      Thanks, Timo! And congrats. I really like what your doing over there. Having that little extra flag or reminder in our heads at all times can really go a long way.

      Reply
  6. Rana Shahbaz

    Times pass really fast, actually when you are running a small business it feels like time on steroids. If you are not good at managing your money especially cash flow, can be really dangerous.

    Small tip: Try to save 10% of your income every month even though you have to eat oatmeal.

    Reply
  7. Mike Garner

    Mmmm…feeling a little guilty here. One of my major problems with one part of my business is really long payment times. We’re talking 4 or 5 months here. Some however, have paid up front, or at least half up front.

    If you’re starting up, set out those ground rules from the beginning and you’ll be half way to success. After all, you wouldn’t go to a supermarket and ask for credit, would you?

    Reply
  8. Denise Butchko

    It sure does own you – and working capital and support systems are crucial. The “I’m optimistic” is a not a good business plan. Your insights are good reminders not to buy the shoes – but put the cash in the shoe box for when you need it.

    Reply

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