Financial styles are different. They may turn into your friend or foe. Are you ready to sprout your style?
Listen to the podcast version, or read it below:
When you look at the financial styles, there are three and a half types of businesses. I’ll get to that half later. Let’s just start from the main types. There are no rights and wrongs here. You can be successful running each of the three types. But being aware of how you can work with that style makes for a smoother business run.
The Spender/Millennial/Extrovert/Multiple credit cards: Expenses freely, charmingly attracts revenue. This business lives cheque-to-cheque. It is not poor… just spends whatever he/she brings. Bank account is emptied to almost zero between consecutive deals, projects or sales. And this cash flow crunch can become a deep trouble suddenly.
The Saver/GenX/Techie/Introvert/One credit card: This business owner is very savings-conscious, all expenses are constantly under a microscope. Revenues are not that easy to increase. Bank balance is maintained at a healthy operating reserve. Stays away from the loans. He/she is very effective in running operations, but has difficulty to generate revenue on-demand. Approaching cash flow trouble here is perceived long before it comes.
The Unicorn Seeker/Serial Entrepreneur/VC Hunter: This business was timely created on a rising market demand trend, with a vision of selling it still in a startup phase. Exit strategy was drafted very early. The owner of that business doesn’t necessarily even like what he is doing to produce that product or service. It was started with a sole purpose of being poached by a Big Co, or a late-comer to the market. The owner often operates here on a line of credit/loan, whether from a bank or crowdfunding or a family. There is no cash flow crunch at the beginning, as long as it’s all Go, Go, Go, loud and fast.
The remaining half-type is a business, where the owner is blissfully unaware of his/her own financials, and the bell rings only after bank account is empty, revenue dried up, but the bills are still coming. He/she may be a dreamer type, who loves what she is doing, and has passionate causes, but leaves bookkeeping and financial dashboards to a chance, because she never did it, or because he was not born to count the beans…
We call this style… hmm… Head In The Sand comes to mind…
The above classification is simplified and real life small businesses are somewhat more complex. Yet I believe that you can easily recognize yourself in one of the types described here.
Counting beans may not be exciting, however practical financial awareness is a necessity that does not have to be a major chore. Small business owners need a dashboard, where like in a car, they will see at a glance their current status on the road, or in sport terms, a scoreboard of their game. If you are leading 4:0 in the first inning of your game, your strategy will be completely different than when you lost 4 goals by the half-time, wouldn’t it? But you need to see that dashboard daily to be able to have a smooth cash flow ride.
So how can you keep an eye on your dashboard, but not spend on it most of your day? …read more