“It’s the Cash Flow stupid!”

Posted 10.08.2015

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Bill Clinton made headlines with the slogan “It’s the economy stupid”. It drove home the reality that, at that point in time, nothing else mattered as much as fixing the US economy. If you own a business of any size, you are the President of your business world – the buck starts and stops with you. I encourage you then to adopt the mantra “It’s the Cash Flow stupid!” Your approach to debt can often determine the amount of positive monthly cash flow in your business and its ability to grow.

There can be strategic reasons for paying down debt aggressively however in many cases the business owner doesn’t make any tactical and strategic moves because he or she doesn’t see where they can get the capital. Meanwhile they may be doing shorter term financing (ie high monthly payments), paying cash for items that can be financed (ie deplete cash reserves), taking advantage of lump sum loan allowances (ie deplete cash again), paying payables before they are due or not asking for longer terms (ie poor cash management), or feel that because the bank can’t help there are no other options.

On the flip side approach business from a monthly net cash perspective and you can free up capital to hire people, improve systems, run marketing campaigns, upgrade assets or any combination of things. Happy with a small business and comfortable where you are? Great. However if you want to grow your business you need to learn how to manage debt and use it to your advantage.

There is almost always a way to move forward and sometimes all you have to do is start talking to people who have experience where you need help. Make that call!

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