I want to tell you a short story.
Once upon a time, in a kingdom far far away, there was a king. One day he asked his treasurer, “How much gold and cash do we have in the treasure?”
That’s it. That’s the entire story. The moral of the story is:
The king has no idea how much gold or cash there is in the treasure. No matter what the treasurer says now, the king has to accept it.
As silly as this story (and the moral) sounds, many business owners run their companies with the same level of ignorance. Ignorance about their assets, liabilities, receivables, and payables.
Sure you focus on your product launch, add new features, run after the next shiny object, follow tech blogs, go to meetups, etc. It’s all necessary. But don’t forget about money for a single day.
Until you reach financial stability, everything you spend time on should be based on one of these two questions:
1. Will it make money in the short term?
2. Will it make money in the long term?
If the answer to both these questions is a no, then don’t do it. That includes obsessing over colors, logos, code optimization, the perfect website copy, reading blogs, etc.
If you are doing too many things that are long-term focused, then stop and rearrange the priorities. A business lives or dies by the clarity of its cash flow. And cash flow depends on what brings in the money in the short term.
Don’t become the king who doesn’t know what’s in his Treasure. Ask yourself three questions:
- What is my exact account balance right now? If you’re off by more than 10%, prioritize knowing about your financial standing every day until it becomes second nature.
- When is money coming into my account next, and how much?
- How much money is going out of my account in the next 6 weeks?
Clarity on these things will keep you better prepared for what’s coming, and ensure your success.
If you feel lost, don’t hesitate to hit reply to this mail. I can help.
Yours,
Abhilash Purohit