Cash is king - your greatest mistake is to run out of cash

Ateneo Professor on Entrepreneurship

Rizal Philippines
July 21 2019

Despite all the trash that cash or money  is getting from the Holier than Thou Groups, we need cash to transact to buy  stuff for the things we need.  In business, you need cash run the business - pay your employees and suppliers.   Cash is the stuff that makes the world the business go round.

So never run out of cash. It is the  greatest sin, mistake that your business can make.  The business world can be unforgiving if you are out of cash ie bankrupt.

Therefore:

1.  Sell  (that is the first thing in your agenda)
2. Collect your receivables promptly and decisively
3.  Anticipate your cash needs see your bankers, creditors early
4. Maintain a good credit standing with lenders and creditors
5.  Stretch your cash position by asking for credit terms and extending this a little bit
6.  Avoid the siren song of over expanding.
7. Engage in a year long cost, cash reduction measures

Sponsored by:   Holy Gardens Group:  Memorial Parks, Chapels, Funeral Service, Cremation and Memorial plans...

Cash Management for Start Ups

An Ateneo Graduate School of Business Advantage

I have a daughter who is into selling of beauty equipment on line. This November, her sales was almost a million. Not bad for a one woman show who does business on line, without ads and sales organization. All she got is a driver, internet connection, a cellphone, and the car of her sister.

However, when I asked her whether she got plenty of money, she said she still needs to borrow; she is cash short. I asked her why? She said she accepted pdc. What?

Some comments and observation:

l. Early in the ball game, if you are playing the price game, go for velocity of money, maybe low margin but mostly cash;

2. If you must accept pdc or credit: grant only to people you know, price the credit terms higher (to cover your risk) be sure your downpayment covers the COGS in case your buyer is a bad risk;

3. If you must grant credit; increase your credit lines; match your receivables with your payables; if you do not have credit; avoid credit terms.

I hope she gets wiser. Kids now do not accept advise from their parents; even if the latter has experience and knowledge