| I recently had a very interesting week: | | | | As my client company demonstrated, if you have |
| - On the Monday I found myself in the Post Office | | | | enough cash available, you have a wonderful safety |
| handing over a very large cheque to pay my annual | | | | blanket in place. |
| tax bill. Paying out so much money would normally be | | | | This is a basic truism - when Joseph interpreted |
| enough to make a grown man (me) cry, but to be | | | | Pharaoh's dream and advised him to store grain |
| honest I had a smile on my face. Why? Simple really - | | | | during the seven years of plenty, in readiness for the |
| I knew that I'd been saving the money from my | | | | seven years of famine, he was teaching a |
| earnings during the year and so I had plenty of | | | | fundamental business lesson. The problem is that |
| money in my business account to cover the | | | | many businesses (large and small) fail to learn this |
| payment. | | | | lesson, with the result that in 'times of famine' (aka |
| - On the Tuesday I had a meeting with a client who | | | | credit crunch/recession/economic downturn) they |
| owns a large kitchen and bathroom supplies company. | | | | suffer commercial 'starvation'. |
| As we discussed the economic climate, he was very | | | | Lesson 2: |
| upbeat. Not only did his company have enough | | | | The second lesson is even more pertinent to the |
| money in the bank to carry them through at least | | | | economic crisis we are now experiencing; and it's |
| the next 12 months, but also a local bedroom | | | | simply that times of crisis always present excellent |
| furniture company had recently gone out of business, | | | | opportunities - especially for those who have heeded |
| so he had taken on some of their staff and had | | | | Lesson 1! |
| expanded into supplying bedroom furniture. | | | | All the news at the moment is about failing |
| - Later in the week, I watched a TV programme | | | | businesses, but - as my client company |
| discussing the effect of the credit crunch on the car | | | | demonstrated - every business failure presents an |
| industry. The big message was that, if you are in the | | | | opportunity for other businesses to fill the void left |
| market for a new car, there has never been a better | | | | behind. Customers of failed businesses don't just |
| time to head to the showrooms. Looking for that | | | | evaporate into thin air, they have to find another |
| dream Lexus? You can virtually ask them to pay you | | | | supplier. |
| to take it off your hands! In fact one car company | | | | And don't forget what happened to Joseph and the |
| (Mazda) is even offering a 'buy-one-get-one-free' deal | | | | Pharaoh; during the seven years of famine, Egypt |
| on new models! | | | | increased its wealth by selling some of the stored |
| So what do these 3 unrelated incidents teach us | | | | grain to the starving citizens of neighbouring |
| about business? For me, 2 messages stand out quite | | | | countries. |
| clearly: | | | | Also, as any car buyer will now find out, troubled |
| Lesson 1: | | | | times may mean that you can drive down costs by |
| Firstly, a return one of my favourite themes: I love | | | | negotiating with suppliers who are desperate for your |
| the old adage, "sales are vanity, profit is sanity, cash | | | | business. And for a business, saving money in this |
| is reality". It doesn't matter how many sales a | | | | way might be the difference between having to |
| business makes if it's not making a profit on those | | | | make redundancies and saving jobs; or it might even |
| sales. And that profit needs to be turned into cash in | | | | be the thing that ultimately saves the business from |
| the bank - enough to always be able to pay the bills | | | | failure. |
| when they arise (like my tax bill). Maintaining a good | | | | Take care of the cash in your business during the |
| cashflow is essential for long-term business success | | | | good times and it will look after your business during |
| and is even more important in these difficult times. | | | | the bad times... |