Collect It Quickly, Spend It Slowly
Write that down–right now. Now put that someplace where you will see it every day. It is that important.
Everything you do in business is ultimately about having as much cash as possible.
With sufficient cash reserves you can:
- Purchase inventory and equipment at favorable prices.
- Hire employees when you need them.
- Maintain market share by offering lower prices than your competitors.
- Run a continuous marketing campaign to attract and retain customers.
- Enter new markets.
- Expand your product offering.
- Survive an economic downturn.
In other words, with cash you control your destiny. Without cash you do not. It is that simple.
There are many things you can do to maximize your cash position, such as reducing the cost of your products, maintaining tight control of your expenses, enforcing a minimum profit margin policy, and having an effective credit management program. We’ll look at all of these in future posts.
