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Monthly Archives: June 2013

Life Leadership Series – Intro

Behavior is often harder to change than acquiring knowledge of what to do. Many of us know what we should do but struggle in the doing of it. Unlike a machine that can be programmed to do a task and repeat it the same way each time, we are human. It often requires tremendous effort on our part to exercise personal leadership. King Solomon wisely observed that “He who is slow to anger is better than the mighty, and he who rules his spirit than he who takes a city.” Proverbs 16:32.

So how are we doing ruling our own spirit? How would those who know us best, characterize our exercise of personal leadership on the whole? How well do we recover when we respond poorly? A respected colleague of mine recently reminded me to say out loud, “that is not like me” or “that is not who I am” when I act in a way that is inconsistent with how I desire to behave. These simple statements can serve to remind myself and others that this is not how I expect to conduct myself in the future. Many times this will be all that is needed for an apology and to self-correct my own behavior. For more grievous offenses given, I may need to seek forgiveness and offer to make things right. Then I move on, seeking to rule well my own spirit.

Exercising personal leadership and accountability has helped me in both my private and professional life. I find that life with others is more fun and rewarding this way.

Life blood of your business

The cash flow of a business is its life blood.  When it stops, the business stops.  Suppliers stop shipping the materials you need.  Employees look for work elsewhere.  Landlords lock to door.  Utility companies turn off the power.  At that point, any on-going enterprise value you thought the business had is mostly gone.

It is possible for cash flow to run dry even when it otherwise appears that the company is profitable on its Income Statement.  To ensure the business has adequate cash, Balance Sheet items such as  Working Capital, Fixed Assets, Debt Service and Equity Distributions must also be managed properly.  A large accounts receivable may become uncollectible and seriously interrupt cash flow.  Inventory may become obsolete or damaged. Excessive additions to Fixed Assets may have too long of a pay back period.  Debt Service that is too large a portion of the company cash flow from operations could contribute to cash shortages when the unexpected occurs.  Owner’s may have personal reasons to pull equity distributions out of the business.  These are all balance sheet management examples that impact cash flow.

Obviously, businesses which are unprofitable, as measured on the Income Statement, are at risk of running out of cash.  They may be in startup or expansion mode in which case they must keep their eye on the remaining length of their capital runway.  That is, the financing they have raised for this purpose needs to last until the new venture starts generating profits on its own.  Or the company may be in a down-turn in sales volume and experiencing temporary losses which if not addressed in time may exhaust all cash flow reserves.

Over the past three decades I have accumulated many case studies of […]