I’ve been studying the by one of my mentors Michael Hyatt. See last week’s newsletter for the 1st Key: Lead Yourself First.
The #2 Key to Building a Business that Lasts in Any Economy is:
Maintain Your Grip on Reality — especially your financial reality as a business owner.
In business there are 2 things that will distort reality:
- Success. Think about that. When you are experiencing success, you tend to thing that winning is just the norm.
- Your Position. The further you get from where you started, the easier it is to forget where you came from. It’s easy to get a distorted viewpoint the more you move up in an organization.
How do you stay grounded in reality? You need equal amounts of Honesty and Faith. This is actually called The Stockade Principle (from Jim Collin’s book Good to Great) – U.S. Navy Pilot, James Stockton, who spent 7 years in a North Vietnamese POW camp, said that the men who survived weren’t overly optimistic, nor were they overly pessimistic. The people who survived embraced reality.
This is nowhere more important than in your financial situation. You have to embrace reality here. Cash is the lifeblood of your business. Cash is king particularly in a crisis. If you have cash, you can live to fight another day, but if you run out of cash, you are done.
Here are some strategies that Mike and I have used to increase cash flow and decrease outflow:
- Track your cashflow – maintain a basic, simple PNL for incoming income and outgoing expenses.
- Set up an emergency fund that includes a separate chargeback fund. Having 3 months of living expenses as a goal will bring huge financial peace of mind.
- Maintain a schedule that emphasizes income generating activities. We call these “The Big Rocks.” They include dialing, sitting on appointments, and recruiting. Virtual appointments require no extra time in the car or money in your gas tank. Capitalize on this new business model to increase your activity and decrease your costs.
We’ll check out Key #3 next week!