Managing Cash Flow

Why the Business Exists 3
• Customers—present and prospective
• Owners and shareholders
• Management and supervision
• Employees and contractors
• Vendors and suppliers
• Special interest groups (unions, environmentalists)
• Government (FDA, EEO, EPA, FAA, IRS, legislative)
THEY ARE ALL CUSTOMERS; WE MUST RESPECT
THEIR POINTS OF VIEW
AND EARN THEIR RESPECT FOR OURS.
2. Cash Conversion. This dictates that the company provide desired goods
and services so that the investment in the business is as quickly converted
to cash as possible, with the resultant cash inflow exceeding the cash
outflow, ensuring long-run profitability, positive return on investment,
and positive cash flow. The correlating philosophy to this goal can be stated
as follows: “To achieve desired organization results using the most
efficient methods so that the organization can optimize the use of limited
resources.”
IF THE COMPANY DOES NOT GENERATE POSITIVE
CASH FLOW, IT WILL NOT STAY IN BUSINESS.
3. Making Money. The easiest and most obvious reason that most businesses
use as the reason for existence is to make money. While certainly a legitimate
and essential goal, it is not by itself enough without the others.
MAKING MONEY IS NECESSARY, BUT HOW WE
MAKE MONEY IS MORE IMPORTANT.
4. Survival. To live and fight another day! This is arguably the overarching
goal of any business that is not liquidating or shutting its doors. The business
must first survive to be able to achieve its other goals.
SURVIVAL IS ATTAINABLE ONLY WITH ADEQUATE
CUSTOMER SERVICE,
CASH CONVERSION, AND REAL PROFITS.