CASH FLOW
Time has moved quickly while I have been practicing law. I started practicing law in 1999. Horribly naive and incredibly brash, I thought I could do anything. What a fool was I. Wait, I’m still a fool because I still struggle with the most important thing in business - cash flow. Law school does not prepare you for business. Practicing law is a business and a profession and law schools teach you how to think like a lawyer but they do a horrible job of teaching lawyers how to be business people.The most important business rule to keep in mind is cash flow. Over the last 9 years I have done my share of fighting businesses that have robbed Peter to pay Paul because of a lack of cash flow. I have attempted to rescucitate companies with legal maneuvers directed at trying to achieve the owner’s goal of holding on for “2 months” so they could land this contract or receive this payment.CASH FLOW!!!!I have advised many people to seek bankruptcy protection because of a lack of cash flow. I am learning that cash flow is different from cash reserves or cash availability (such as a line of credit). Reserves and available cash are stagnant pools of money that might hold off the inevitable but these are far cries from Cash Flow. Reservoirs of money do not bring life into a company. Credit lines and cash reserves are the morphine and oxygen of a company placed in hospice. Cash flow is the blood of any business. As money flows in beating the heart of the business which pumps needed cash blood into other parts of the company. Activities that relate to cash flow are the steady reduction of interest bearing debt, expansion to meet demand by purchasing new materials, investing in technology or bringing on needed employees. YOUNG ENTREPRENEURS LISTEN AND LISTEN WELL BECAUSE YOU COULD HAVE THE BEST IDEA IN THE WORLD BUT IF YOU DON’T HAVE CASH FLOW NOTHING MATTERS.
YOUR BUSINESS WILL BE DEFINED BY YOUR BUSINESS CASH FLOW!!!!
AH
Mike on 03 Apr 2008 at 2:04 am #
So how do we get this so called “cash flow” integrated into our business? For some people the money that comes in every once in a while is what they consider their “cash flow”.. For instance, your law firm.. If you dont have clients, you dont have cash flow correct? So how do you make a business constantly cash flow without using another business that does cash flow, supply cash for your other business?? To me it seems like a vicious circle, you are never really cash flowing anything, cause you always have to do some marketing or something to get the business you need in order to create the cash flow.. then you end up using that money to invest in something else that you end up spending money on to make that work as well.. and so on..