How do you get the cash you need when you need it? For a business owner, this is an important question. It can be done two ways, internally and externally. Watch the video to learn more.
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Read the video transcription below:
How do I get the cash I need when I need it?
This is an extremely important question. So there are only two ways to raise money, and I like to simplify everything into common sense. You could do it internally, which is the best way to raise the money. You’ve got good operations, good sales, good management, boom you’re running your business. Sipping a pina colada on a beach in Puerto Rico or Cancun whatever it may be. And externally which is borrowing money.
External is a good short-term solution, a bad long-term solution. Let’s talk about internally. Over the long-term you must make your money through operations.
Now here’s the disconnect between accounting and the way we think as business owners, we think as business owners of cash coming in cash, going out period. End of conversation. Cash comes in from selling our stuff, borrowing money, or getting equity investors to come in.
Usually, we end up being our own investor. It goes out for laborers, material, overhead, subcontractors, buying more assets and paying dividends or paying back debt. Money comes in faster than it goes out for you to make more money. However, see that dotted line? Anything coming in and going out on the left side of the dotted line is on your profit and loss. And on your right side is on your balance sheet. So they’re not even designed for you.
They don’t think the way you think. So that’s the biggest fallacy of accounting that’s for investors and bankers.
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