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Semi-Retired

Cash (flow) is King

Posted by kdadmin on June 9th, 2014.

Nothing destroys personal and business finances faster than a cash flow imbalance. If you spend more than you make, you’re eventually headed for bankruptcy. It doesn’t matter if you have an investment account worth a billion dollars or sixty thousand. Cash flow is the great equalizer.

In an effort to educate, illuminate and entertain, I’ve put together a series on cash flow.

Yawn. Right? Wrong.

Let’s say you had an operable brain aneurysm. Would you want to know about it before or after it burst? Remember, a ruptured brain aneurysm is fatal in 40% of cases, and roughly 66% of the survivors have some permanent neurological effect. (Source: Brain Aneurysm Foundation)

Since the brain aneurysm is operable, you would have a chance to do something about it. Apparently, most patients without prior bleeding can go home after surgery in 2-3 days. (Source: Treatments) SO, would you prefer 40% fatality + 66% permanent neurological damage or 2-3 days in the hospital?

The same is true for your cash flow, but the statistics are worse. Spending more than you earn has a 100% fatality rate (bankruptcy), eventually. Is there permanent damage? Maybe. If those who failed don’t figure out WHY they failed and vow never to do it again; they may find themselves bankrupt, and starting over, again and again.

Funny, though, if you ask a client to face their catastrophically damaging cash flow imbalance, they will sometimes choose to risk it. They will come up with all sorts of baloney about why they can’t face it for this and that reason, even when presented with the results of simple math.

I’m not kidding.

Some people will actually risk a cash flow imbalance (with a its 100% failure rate), but I can’t think of anyone who would risk a brain aneurysm (with it’s 40% failure rate).

Hence, this blog series. Stay tuned.

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