As I’ve maintained over the past couple of articles, cash is the lifeblood of any business. If you run out of cash, your business will probably die. Wisely managing cash can fuel profitable growth. But, a company’s demands for cash will change as it matures from a small, early stage startup into a large and stable enterprise. Even if you’ve hired a Chief Financial Officer, as founder or CEO, you ultimately are responsible for ensuring that your company has the cash it needs. Understanding these needs as your business grows, and managing the business appropriately is critical for your business to survive and thrive.

In the article linked below I look at the cash management needs of a business as it moves from pure startup to scaling business to a stable enterprise and finally to a mature business. I use the timely example of OpenAI and ChatGPT to demonstrate how cash needs can quickly change.

Read the full article here.

Fall in Love with the Problem, Not the Solution by Waze co-founder Uri Levine is full of insights and advice for entrepreneurs based on his experience with some very successful startups. There’s a lot in it that I agree with and would probably give the same advice to companies I was advising. There are some things I disagree with and I would give counter-advice. As long as the reader takes the content for what it is — one man’s opinion — this can be a very valuable book for entrepreneurs. Especially compared to the cost of a highly qualified advisor, this book is well worth the price and time investment.

Read the full review here.

Cash is the rocket fuel that powers growth for all kinds of businesses. Leaders must understand where their cash goes and where it’s going to come from. They need to plan for those negative and positive cash flows and they especially need to plan ahead if they will need external funding.

There are two broad types of sources of cash for a business — inside funding and outside funding. Inside funding can include cash provided personally by the management team, but more sustainably a healthy business will generate cash through sales that will more than cover operational costs. Outside funding includes cash borrowed from lenders (debt), cash provided by investors in exchange for equity (ownership) in the business, and sometimes government or private grants.

Cash flows out of the business in three types of activities. The most consistent and significant are the expenses of operating the business. The most strategic outflows are investments made in the business. Finally, the company may use cash to pay back loans or to distribute dividends to investors.

Read the full article here.

Cash is the lifeblood of any business. One of the most common reasons businesses fail is because they run out of cash. A company can consistently report a profit and yet still go out of business because it runs out of cash. So, it’s important to carefully manage the cash coming into the business and the cash flowing out.

There are three standard financial statements that businesses use to understand and explain the health of the business. These are the cash flow statement, the income statement, and the balance sheet. None of these statements, on their own, can give you a complete picture of the health of the business. Especially in smaller businesses, cash is critical so I find the cash flow statement the most important to watch to understand the immediate health of the business, but neither the balance sheet nor the income statement can be ignored.

By the time I earned my MBA, I had spent a couple of decades looking at and analyzing these three types of financial statements. Since my undergraduate degree was in engineering, I had to take basic accounting pre-requisite classes before starting the MBA program. I found it fascinating to learn how these three financial statements work so seamlessly together. 

In the article linked below I provide a brief guided tour of these three financial statements and what they tell you about the health of your business.

Read the full article here.

Financial Intelligence by Karen German and Joe Knight is an incredibly helpful book for managers at large companies to make sense of the accounting and finance drivers shaping their work. The book certainly covers the basics of how to read standard financial reports, but goes much further. The book is especially strong in helping managers to know what questions to ask of accounting and financial professionals and to understand how their decisions can improve the financial performance of their employer. I took my first “finance for non-financial managers” class nearly 30 years ago and since then have earned an MBA with a finance emphasis and yet this book still helped me to better understand some concepts. It’s an easy to read book that is well worth the time investment. I strongly recommend it.

Read my full review here.

Unleash Your Cash Flow Mojo by Sandra S. Simmonsis a book for business owners who probably haven’t had a lot of training in financial management. It provides a simple and straightforward approach to cash management that likely would keep many otherwise challenged businesses out of trouble. The book costs $10 on Amazon (either paperback or Kindle) and only takes a couple of hours to read — likely a worthwhile investment for the vast majority of small business owners who have focused more on doing their company’s work than on the details of cash management, and therefore might find themselves in a cash crunch at some point in the life (and possibly near-death) of their business.

Read the full review here.

I like books. At ClearPurpose, I often write brief reviews of books I’ve recently read. So far, I’ve written 74 reviews and those reviews are usually pretty positive — likely due to selection bias. But which books have actually been the most helpful to me in understanding and explaining business? In my various articles at ClearPurpose, I’ve referenced 134 different books.

Here are the 10 I’ve referenced the most (along with the links to the articles that reference each book):

• Built to Last (2020–07–01, 2020–07–24, 2020–08–11, 2020–08–17, 2022–03–14)
• Competitive Strategy (2020–06–28, 2020–07–01, 2020–07–27, 2020–09–03, 2022–07–19)
• Competing for the Future (2020–04–13, 2020–04–22, 2020–08–04, 2022–02–28, 2022–03–14)
• The Lean Startup (2020–04–24, 2020–05–12, 2021–03–11, 2021–03–27, 2022–10–25)
• Traction (2021–12–24, 2022–01–05, 2022–07–11, 2022–07–19, 2022–08–02)
• The Startup Owners Manual (2020–04–24, 2020–04–29, 2020–05–13, 2020–08–25, 2020–09–04, 2021–03–05)
• Business Model Generation (2020–04–06, 2020–04–08, 2020–04–15, 2020–04–23, 2020–04–23, 2020–05–01, 2020–07–01, 2020–09–10, 2022–07–19, 2022–10–25)
• Blue Ocean Strategy (2020–04–06, 2020–04–20, 2020–05–28, 2020–05–29, 2020–07–01, 2020–09–01, 2021–04–26, 2021–09–30, 2022–03–14, 2022–09–05, 2022–12–30)
• Value Proposition Design (2020–04–06, 2020–04–08, 2020–04–15, 2020–04–23, 2020–04–27, 2020–04–28, 2020–08–27, 2020–09–04, 2021–02–20, 2021–03–13, 2021–11–26, 2022–09–05, 2022–10–25)
• The Bible (2020–04–06, 2020–04–21, 2020–04–23, 2020–04–29, 2020–05–11, 2020–05–12, 2020–08–18, 2020–08–19, 2020–08–20, 2020–09–02, 2022–02–14, 2022–03–21, 2022–04–04, 2022–05–02, 2022–05–30, 2022–09–09)

So far in 2022, I’ve written 61 articles here at ClearPurpose. Since launching the publication in 2020 I’ve written approximately 300 articles in total. It’s always interesting to me to see which stories are most popular with you, our readers. You may also be interested to see which of our stories are most popular to see if you’ve missed anything throughout the year.

Here are the 10 stories that were most viewed by readers in 2022. Four were written this year, two are from 2021, and the remaining four are from 2020. These are listed in order of popularity starting with the most viewed:

1. What is Strategy? (2022)
2. Making Strategy from Scratch (2022)
3. What is a Business Operating System? (2022)
4. Book Brief: HBR’s 10 Must Reads on Strategy (2020)
5. Book Brief: The Discipline of Market Leaders (2020)
6. The Diamond-and-Square Framework (2021)
7. The Customer Network Strategy Generator (2021)
8. Scenario Analysis (2022)
9. Book Brief: Competing in the Age of AI (2020)
10. Competitive Strategy (2020)

As a bonus, here are 10 articles from this year that I think should’ve been more popular than they were, based on the articles that many of you liked:

1. What is Your Vision? (February)
2. How to Sell More (October)
3. How Can You Effectively Communicate? (April)
4. What is Company Culture? (April)
5. What is Marketing? (September)
6. Book Brief: The Unicorn Within (October)
7. Book Brief: Scaling Up (November)
8. Book Brief: The Advantage (May)
9. Book Brief: Traction (January)
10. “How Do I Involve God in My Business?” (November)

May you have a blessed 2023 and may my articles continue to serve you well. Let me know if there’s anyway I can help you or your business.

In the summer of 2022, Southwest Airlines cancelled over six thousand flights. At the time, CEO Bob Jordan said “We actually had really good performance”. He said that because he was benchmarking Southwest’s performance against the rest of the airline industry which cancelled over 45,000 flights. Southwest cancelled 1.8% of their flights compared to American Airlines’ 4.6%. But Southwest’s vision is “to be the world’s most loved, most efficient, and most profitable airline.” Leaving hundreds of thousands of passengers stranded doesn’t measure up to that standard.

Jordan and Southwest didn’t take the warning signals of this past summer seriously and this week the airline’s festering problems have led them to cancel more than half their flights each day. Ironically, the problems stem at least partially from the company’s founding desire to stand apart as one that truly cares about its passengers. How did the company get here and what does it need to do now?

Read the full article here.

Almost everyone feels “swamped” at times (and most of us feel that way often). Redeeming Your Time by Jordan Raynor provides a Biblical framework for escaping that helpless feeling and suggests over 30 different specific practices you can implement today to put the principles to work. Although some of the practices build upon each other, you don’t need to adopt all of them to start enjoying some of the benefits. You can start with one practice today and then build on it as you feel able. 

If you want to set a New Years goal of improving your time management, I strongly recommend this book.

Read my full review here.