Become Financially Intelligent or become a Slave.

One of my consulting clients recently asked me, "What is the leading cause of business failure or organisational collapse?

Research by many prestigious institutions like Dunn & Bradstreet show that the leading cause of organisational failure is bad cashflow management.

Even hard work, sincerity, passion, talent, technology, great products, good markets etc. cannot save an organisation which has poor cashflow management.

Sales is Vanity,

Profit is Sanity,

Cashflow is Vitality.

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What is cashflow?
Simply explained it is the amount of cash that actually flows in and out through the accounts of a business. It represents the liquidity of funds within a business and in a sense the fuel that allows the business to keep running.

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Tiny or very large, more than 85% of all enterprises that fail globally, do so because they were unable to manage cashflows effectively.

As a consequence of neglecting cashflows or starting with too little money, many honest, sincere, talented, hardworking people with good products and services become bankrupt. Lenders lose money, but owners lose everything, including their sanity. Many land up facing harrowing litigation, and also endure social disgrace.

Research shows that more than 70% of all businesses have no idea about the actual details of their financial situation other than their bank balance. Accounting may be boring, but failure to plan and implement your finances can be fatal.

It is Unfortunate that in our education system we teach people thousands of topics but rarely do we not teach the vital life skill of 'Financial Intelligence'. That is the ability to understand fundamentals of money, cashflow, banking, taxes, insurance, savings, investing etc.

You may ask, "Why do I need to know about cashflow?"
Everyone needs to know about cashflow, because, the same issues effect that affect organisations also affect individuals in their everyday life.

Individuals or organisations, the inability to understand and respect the natural laws of finance and commerce inevitably leads to indebtedness and financial slavery from which escape is next to impossible.

Office Efficiency - Central Social Institution, Prague, 1937

The offices of the Central Social Institution of Prague, Czechoslovakia. April 1937 “The offices of the Central Social Institution of Prague, Czechoslovakia with the largest vertical letter file in the world. Consisting of cabinets arranged from floor to ceiling tiers covering over 4000 square feet containing over 3000 drawers 10 feet long. It has electric operated elevator desks which rise, fall and move left or right at the push of a button. to stop just before drawer desired. The drawers also open and close electronically. Thus work which formerly taxed 400 workers is now done by 20 with a minimum of effort. Ref: B196_095071_3660 Date: 26.04.1937 Compulsory Credit: UPPA/Photoshot”

You have to play the game to win it.

In life its not sufficient to be merely efficient but to also be effective. Someone once asked my father Man Singh ji, 'What is the secret of your success?' He remarked, "I do not always make right decisions. I make decisions, and then almost always make them right" Read more ..........

The neck of the bottle is always at the top.

F requently requested to assist organisations large and small, I observe a common and recurring theme. The issues revolve around the struggle of owners /managers to manage effectively. This is visible predominantly in companies that have started small and are growing, in family run businesses and families themselves. They are invariably puzzled that management approach, style and methods which worked so well in the past, now just don't work anymore. They resort to even more hard work and effort, yet the situation only worsens. Finding themselves in unfamiliar situations they dart here and there implementing fads, half hearted strategies alien to their thinking and character. They do this because they are getting frustrated and doing something is considered better than doing nothing. They change staff and managers. They churn product mix, vendors and even customers and markets. They try so many things but nothing seems to work. They chang...

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