Most people don’t think those two words go together.
In fact, I never really thought about it either until I heard a story told by Jim Collins, the legendary author of Good To Great. Awesome book, by the way.
It goes like this…
Bill Lazier was a professor at the prestigious Stanford Graduate School of Business and was known for his rather direct teaching style.
When talking about a case study, he liked to get right to the point.
“What’s the central issue in the case?” he pushed.
A bunch of over-achieving, smart-sounding, MBA types rattled off their thoughts…
“The company’s strategic choices”
“Identifying their value chain”
“Developing a brand”
“NO!!!” the professor yelled…
Finally, some brave soul raised his hand. “Uh.. not sure if this is what you are looking for… but the company can’t make payroll next week. The company is going to run out of cash.”
Bingo. Jackpot. A+.
The wise professor then responded, “Never forget, you pay your bills with cash. You can be profitable and bankrupt.”
Think about that. What is this Stanford professors’ point? It is simple: Cash flow is the key to any success in business. You can have the greatest business plan in the world, you can even be profitable, but without cash, you have nothing.
I agree with professor Lazier that Cash Flow is important, but I believe that you must also have a War Chest of C.O.H. (Capital On Hand). Here’s why C.O.H. gives you staying power. There will always be unknown forces affecting our economy (e.g., COVID-19) that can derail your family or business overnight. Millions of Americans are finding this out right now and they have too much unproductive debt and are without the capital reserves to weather the storm.
So the real question becomes, “how can I optimize my resources to increase my monthly cash flow so I can build a war chest of C.O.H. (capital on hand)?”
Don’t be like the MBA types in the story. They missed the real point of what will create financial success and ultimately your freedom. They thought the answer lied in some mystical and hidden formula, theory, or strategy.
Sounds a lot like personal finance methods!
They were wrong. The answer is CASH and C.O.H. If you want to learn how you can increase the cash flowing to your household or business so you can build a War chest and have the peace of mind in the midst of a storm, sign up for the on-demand masterclass today.
Your Freedom Matters,
Co-Founder of WealthyIQ
P.S. If you want to read the whole story I mentioned above, check out both of Collin’s books below: How the Mighty Fall and Why Some Companies Never Give In