# 1 Your Ego Writes Checks That Your Business Can’t Cash
Starting and owning a business produces a special high and invites you to believe crazy things your ego says. To keep the high going and feed the beast that is the ego, you start buying things you cannot afford. Things like a new car, over-sized outdoor signage or new office furniture. A successful person might consider buying these things only after the business made a profit. And that same person only considers it.
# 2 Your Ostrich Borrows Too Much Money
Not being able to pay the bills hurts. On so many levels. If you can’t pay the bills, the problem is not that you can’t get funding. Borrowing money is easier than fixing the cash flow issue. It’s a band aid for something that’s hemorrhaging. Don’t stick your head in the sand.
# 3 Your Race Car Driver Won’t Put on the Brakes
Uncontrolled growth is a recipe for crash and burn. Sometimes you have to say “no” to speed if you cannot manage the growth. Also, growing your business is not a solution for cash flow problems. If you aren’t managing your cash well, growing your business will just magnify the problem.
# 4 Your Free Spirit Won’t Stop To Look at the Numbers
You will not make good decisions for your business if you don’t look at the financial numbers. If it’s something you hate doing, hire a bookkeeper or business coach to make you sit down once or twice a month and study the numbers and percentages. Don’t be the business owner who has to close the doors next week and had no idea the end was at hand.
# 5 Your Grasshopper Has No Plan B
What is your Plan B for the hard times? You should always have cash reserves as the Plan A in your Plan B. If you haven’t been able to build cash reserves, then get into place the ability to borrow money in the short term. Borrowing money is not the ideal way to get out of a cash flow crisis, but it can be an effective Plan B when your back is against the wall.
# 6 Your Child Mistakes Cash Flow For Cash Stick
If you are inexperienced in managing cash, you may not understand how much things cost. You see $250K in annual sales running through your bank account, and the inexperienced cash manager in you mistakes cash flow for cash stick (profit). After eleven years in business, I’m still amazed at how much it costs to run a business. To an inexperienced owner, $250K seems bottomless. How could it ever run out? Always assume you have less money than you do.
# 7 Your Hippie Makes Business Decisions Based On Everything Except Financial Data
The “bottom line” is not what matters all of the time, but if you want to stay in business, it does matter most of the time. Making a profit and collecting amounts due from customers often gets a bad rap because of the way some people go about it. If you don’t make money, you and your employees will be out of a job. And how is that helping anyone? Cash is important, profit is important, and how you get both is important. Use your business to change the world, but bring in the cash so you can keep changing it!