As a business owner, the only time I feel stress-free is when I have sufficient liquid cash available with me.
A business might look successful from the outside with good aesthetics, shiny office space, over-the-top branding, etc.
The sales are good and the profits too. But even though these numbers are good, the business owner is not very content.
The reason!
The business looks good only on paper. The sales and profits digits shine on paper, but in reality, the owner is miserable.
As there is no "liquid cash" available to spend.
Liquid cash = Money that is immediately available for use.
(Cash in hand, UPI balance, Emergency buffer, Savings)
No liquid cash to spend
Most of the business cashflow is stuck in:
1) Credit given to customers
2) Overstocked or Dead Inventory
3) Business and Personal Loans
4) Stock Market and Mutual Funds Investments
5) Uncontrolled business expenses
6) Business expansion
Nothing increases the anxiety of a business owner than owning a profitable business model and not having money to spend.
The profit on paper is THEORY.
The cashflow is REALITY.
Optimizing cashflow
Work on optimizing your cashflow...
1) Track all the inflows and outflows of your business.
2) Create different cashflow containers, say, marketing, operations, tax, savings, enjoyment, wealth, etc.
3) Allocate funds from profits to these cashflow containers on an average basis. (Weekly or monthly)
4) Only spend the allocated money.
5) Set an amount and take out money from the business profits as the owner salary and run the business on the rest.
Do this consistently for the next 6 months.
It will,
1) Fix the hidden money leaks.
2) Give full control of the cashflow.
3) Give you the actual reality of your business (not just on paper).
4) Actually retain liquid cash in hand without affecting your business or mental well-being.
Being INVINCIBLE
This level of clarity helps you plan your business and personal finances.
When you know how much you have and how much you can spend, you feel invincible.
Yes INVINCIBLE.
I am not kidding. I have been doing this cash flow tracking for 5 years now.
Your future cashflow situation depends on this simple question,
Do you want a big-looking business with no money in hand or a substantial-stable business with liquid cash in hand?
Your answer reveals your business philosophy.
That's all for this week.
See you next Saturday.
If this resonated with you, reply YES.
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