Mike Periu
shares
“I was recently asked:
What is the greatest mistake
first-time business owners make
right at the launch of their businesses?
There are enough mistakes
to fill several books,
but in my experience
the business killer is
focusing on profitability.
This may seem counterintuitive,
as being profitable should be
the goal of any business.
But this goal usually comes
at the expense of something more important:
cash flow.
Managing your cash is
by far the single most important factor
in business success.
No amount of sales or profits
can save a business
from having insufficient cash flow.”
I can attest to this.
I drafted the financials
for many new businesses.
Even for brand extensions
within one of the largest beverage companies
in the world,
I drafted cash flow statements.
Yes, we looked at regular income statements also
but the cash flow projections
were the most perused,
the most heavily debated.
(If the cash wasn’t used for the brand extension,
it could have been used elsewhere.)
In my own business,
even though I’m a professional accountant,
I only update the formal accounting statements
once a year.
The cash flow statements are usually updated
daily.
Run out of cash
and your business is in trouble.
Focus on cash flow.