Part 7 of this series is The Financial Wall. There are three key financial resource ingredients required in the running of a business:
- Cash Flow
Revenue is the money that flows into your business as a result of the products and services you provide to your customers. Profit is the difference between what your customer pays you and that total cost you incur in the production of your products and services. Cash Flow is the amount of funding required to keep your operation going during the ebbs and flows of paying bills and generating revenue.
Questions To Answer About Any Financial Resource
When you are running, or considering starting a business, there are some key questions you need to honestly answer:
- Have you earned the right to handle the money in your business? If you are not fiscally responsible at home, the chances are very great that this problem will be magnified in your business. Are you a wise spender or do you always splurge on the latest toys and technology? How do you view your financial resource responsibility to both your customers and your employees? Are you prepared to make personal sacrifices to see your business succeed? Do you have sufficient personal financial resources to weather an economic storm that causes a downturn in your business?
- What are your investment priorities? Do you have a clear vision of where to strategically and tactically invest money in your business in a way that will produce the most positive results? Are you attempting to grow your business too quickly and without the proper underlying asset base?
- What is your view of debt? Are you an all-in, borrow as much money as I can, and then pray that things work out kind of person? Or do you have a pay as you go mindset? What are the pros and cons or both these philosophies as they relate to the longevity of your business and the security of both your employees and customers?
- Do you take jobs under the table? In other words, what is your definition of financial integrity? Are you honest and above board in all of your dealings?
- What role does “mercy” play in your business dealings? Are you a hard-nosed manager who will take customers or suppliers to court at the drop of a hat if everything is not perfect and paid on time? Or do you have a heart for others such that you are willing to work with them to come to fair and equitable resolutions on critical issues?
Take the time to seriously consider and evaluate yourself on each of the questions. When you dig deep enough, you will find that all of them are rooted in your heart – and your true desires for your life and business.