The Single Most Important Thing In Any Business
Friday was a tough day for me. A friend of mine – an entrepreneur – hit rock bottom, and did so very publicly. After three years of trying to build his dream business, he still isn’t even managing a survival-level livelihood. The thing is, he’s had income opportunities, but turned them down, ostensibly because they didn’t fit with his vision for his business.
I believe that entrepreneurs should pursue their passion and be true to their vision of their business. But the idea of “do what you love and the money will follow” can be extremely dangerous. There’s more to it than that. You also have to offer a product or service that people are willing to buy at a price that can provide you an acceptable profit margin. And you have to sufficiently promote it to attract enough paying customers to make you a living.
But most importantly, you have to survive. You have to be able to cover not only basic living expenses, but basic business expenses, e.g., office supplies, maintaining your computer and other office equipment, phone and internet access etc.
The single most important thing in any business is cash flow.
As Philip Cambell says in his article, “The 10 Rules of Cash Flow 101“:
Never Run Out of Cash. Running out of cash is the definition of failure in business. Make the commitment to do what it takes so it doesn’t happen to you. [...] It’s important to recognize that the basics of cash flow 101 are what keeps your business alive. Manage it with the care and attention it deserves. It’s very unforgiving if you don’t. Remember, cash is king, because no cash means no business.
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