Today we are going to talk about money again. It is said that money speaks the language that everybody understands, and of course I know that the majority of entrepreneurs start enterprises to make money. Isn’t it? Well, even if your objective is a bit different let’s just proceed as the below issues I’m raising about chasing money also applies to you. I very well know that the carefully crafted vision and mission statements small and great enterprises worldwide have, all requires to be backed with profitability and money (I think cash flow is better to use).
Now, some entrepreneurs take this game of chasing money to a different level; to different approaches that sometimes become counterproductive. Of course it is absolutely good to chase money, but it matters how you do it in your enterprise! I believe some of you are beginning to ask yourself where am going with this article, or what am driving at. In a very basic way, I just want to share some principles about chasing money, principles arising from my observation of enterprises and how they manage this aspect of money. Let me say the following: –
- Money is a reward for value created and delivered. As an entrepreneur, you do well if you focus on continuous creation and delivery of value. This is the gist of the matter. I think everything around the enterprise actually revolves around this. Create and deliver great value, effectively and efficiently, continuously and with a relentless drive for continuous improvement, and you will be smiling to the bank and not chasing money. If you don’t do this you will spend your time chasing scarce money and it will be slow in coming. Don’t you agree with me?
- Money is attracted by products and services that create customer delight. Closely connected to my first point above, is the fact that products and services that provide customer or client delight will always attract money. This business law is as sure as the setting down of the sun. Have you experienced a situation where your customers keep coming back for more? Do they freely and always talk about you to other people because they are delighted about you enterprise? They will keep coming, invite others to come, and all these will come with money. Hardly any chase. Do you get the point here?
- Money follows leadership and management. Your enterprise should have money flowing in with little effort if you have the right leadership and management in place, doing the right thing. Even the guys with money – I mean the bankers, investors etc – will be more than willing to give you money for your business if they can see the right leadership and management in place. Now, don’t ask me about what I mean by the right leadership and management. OK. I might talk about this in a later article, but I guess with some little experience dealing with other business you can have a clue on what I mean. Do you want to start chasing every single coin and kobo, wasting your precious time? Simply have mediocre business leadership and management.
- Most reasonable and balanced people will not hold your money after you have delivered value. Are you with me here? The majority of people and organisations will pay you for the value delivered. Of course there are some that do it immediately and others that take some time. Public institutions like government departments etc might take forever to pay. This might not mean that they don’t appreciate your value delivered. It might be policies, bureaucracy, uncertainty of public cash flows etc (indeed some of us don’t pay our taxes in time). You can’t put all the blame on them! Be a smart entrepreneur. Just remember that there is a time value of money and do your pricing in light of this, and you won’t lose sleep. May be your financing or working capital challenge, that’s another point. By the by, you will occasionally meet some individuals and even organisations that just have that annoying habit of delaying payments even if they have no liquidity problem. They enjoy you making endless calls and visits, possibly to satisfy some people’s ego and make you see that money is very precious. Hard earned money, isn’t it? Ever dealt with such? I guess so. Now, these have their own class, and you can develop some wisdom on how to deal with them. May be we will share some of those tips later.
- Don’t take your money problem to the market. Get me right here? Some enterprises chase money like the world is ending and they need to close their books before that. It’s not that you have defaulted on your terms, but if you have defaulted that’s your business. No complaints. Sometimes it’s because of their internal disorganization and money problems, that they have failed or are failing to manage, and this translates into chasing money like that. Now, don’t take your working capital problem to the market, its’ better to take it to the bank. Isn’t it? Don’t strangle you clients to a two year advance payment because you want money to invest. Not pleasant, isn’t it?
I guess it’s time to stop for today. In conclusion, you can also choose to become very vain and run up and down the whole year chasing money yet doing very little regarding the key factors such as value creation, management, customer delight etc that matter in your enterprise. Get me right, am not saying you shouldn’t follow your debtors, or do without a credit management policy, or fail to market. All these activities might fall under ‘chasing money’ depending on your perspective.
The Wise Entrepreneur