In My touch - Cash Flow is More foremost Than profit

"I must have cash; my earnings statement shows that I made a behalf this month?

When I was growing up in the country-side of North Georgia, one of my first jobs was manually picking up eggs on a chicken farm. Now for those of you who are not customary with that process let's just say that it is not pleasant experience. Basically, you go to the chicken coop and steal the eggs from underneath a sitting hen while trying not to get pecked to death or pooped on. Chickens it seems have the same motherly instinct as other fowl, and do not take friendly to someone advent into their nest and stealing their eggs. Thankfully, technology has made the process of sending 12 year olds into the chicken house to steal eggs obsolete. Now, when the hen lays her eggs, they miraculously disappear from the nest through a trap door onto a conveyor belt to be collected in a nice safe place. Lucky me, I was just born too early have this the technology! 

So, why was I willing to undertake such an unpleasant task at the tender age of 12? It was for one reckon and one reckon only! Cash!  The owner of the farm always paid me in Cash! I would run home to my dad and show him the Cash that I had made from my work at the farm. It was a great experience! 

At around the age of fourteen, I got tired of breathing what seemed like one hundred percent ammonia and fighting chickens for their eggs. No matter how much Cash I came out with at the end of the week I was done in the egg business.The next summer,  I started another venture;  a lawn mowing service. It was in this tiny investment that I learned the truth of Law #15 - Cash flow is more important than profit.

The story goes like this. I had around 10 customers. I would mow lawns for them on a weekly basis at an agreed upon price. I did the work while the day and for most of my customers, I would receive Cash when I completed the yard. For some customers, I would obtain the Cash later because they were at work while the day and not at home to pay me. For those customers, I would leave a note with my bill for cutting the lawn and tell them that I would be back to obtain the money. While all of my customers always paid me, the timing of the payment depended upon when I went back to obtain on the account. 

One week while my summer of lawn mowing, I had a opening to go to Six Flags Over Georgia, an amusement park in Atlanta. The only requirement was that I had enough money to purchase the marker in cash when I arrived at the park on Friday. I worked very hard that week to faultless my lawns so I would have the money to buy my ticket. For some reckon that week, most of my customers were not home at the time I mowed the lawn. I left them my original note and told them I would be by obtain before Friday. For anyone reason, I was unable to obtain the cash by Friday. Frankly, I do not remember the specific circumstances of why I was unable to obtain the money. What I do remember is that I could not go to the amusement park because they were not curious in taking my accounts receivable aging description as payment for the ticket. That was when I learned Law # 15 - Cash Flow is More important than Profit. On paper, I made the same whole of behalf as in all the other weeks. I cut the same whole of yards, charged the same whole of money and had the same expenses. There was only one difference! I did not have enough cash flow to go to the amusement park.

(Apparently, I had a spending problem as well, or I could have used some cash from previous weeks.)

This is a very straightforward example of a trap that business fall in all of the time. behalf and Accounts Receivable is not the same as Cash. And, unless the Kroger down the road begins taking Accounts Receivable as payment for groceries, cash flow will continue to be more important than profit. 

Note to reader - I understand that if my expenses were always more than the whole of money I charged to mow the lawn, I would never make it up in volume. behalf is important, just not as important as cash flow when you want to go to the amusement park!

that guy In My touch - Cash Flow is More foremost Than profit that guy