Cash is King?

“Is cash king?” my friend asked me.

With all the confidence in the world, I said, “Duh! Of course it is!”

But then I started thinking about it. And I wondered… is cash really king?

As you read this, you’re probably thinking, “Yes, Ron! Cash is king! It’s the blood that flows through the veins of a company.” And you might be wondering if I’ve taken a knock on the head. After all, isn’t Profit First all about cash?

When your business is in a cash crunch, the “obvious” solution is for you to pull up your bootstraps, buckle that sales helmet chinstrap, and sell, Sell, SELL. It works; you successfully bring in the cash and go from cash crunch to cash flush. Boom! Nice job.

But wait a second. What happens with that new cash becomes your new problem. And you know what that is because it’s happened before: You spend the money, have little idea where it all went, and wonder why you still can’t pay yourself enough and why your business isn’t profitable.

And the cycle repeats.

Business owners make the same cash-based mistakes over and over because they don’t correct the behaviors that cause their cash flow problems. But there’s an easy way to correct those behaviors: implement a system that works with the behaviors instead of vowing that this time things will be different.

For many businesses, more cash isn’t the answer. A cash flow system to manage their cash is. A solid cash flow system will put guard rails in place to curb overspending, prevent wasted spending, and give you measurements to determine the ROI of cash you do spend.

A cash flow system will make sure you stop financially neglecting yourself and your family.

Without a solid cash flow system, you will continue to make the same cash-based mistakes you’ve always made. Not having cash is a problem, but it’s a problem that’s easily solved with sales and innovation. Implementing a cash flow system takes a bit more work, but a Profit First Professional will make the transition as painless as possible.

You have systems for hiring, marketing, fulfillment, and inventory, but you probably don’t have a system for cash flow management. In fact, a cash flow system is the number 1 neglected system in businesses. Do you remember the relief you felt when you got your hiring, marketing, and fulfillment systems in place? Now multiply that by the frustration your cash position causes, and you’ll begin to understand the relief that having a cash flow system brings.

If your business truly needs more cash, by all means, bring it in. But make sure you have a system in place to manage the cash so you don’t find yourself in the same boat again and again.

I’ll ask you again, “Is cash king?” No, a cash flow system is king. The cash is the queen. (And you can always get another queen. Giggle, giggle, giggle)


Leave a Reply

Your email address will not be published. Required fields are marked *