Archive: Cash Flow Posts

How big of a check can you write TODAY?

Cash Flow Stress Test

Burn rate is a phrase I have always hated; it has rather morbid implications. I first encountered the term while working with dot com executives in the late 1990s who effortlessly dropped the term to describe the amount of cash the company was burning (spending) per month. They divided the burn rate by the cash

Seduced by Homo Fictus

We are addicted to stories. Stories are so fast they can outrun reality. Even in our sleep we tell ourselves stories. The term “Homo Fictus” explains it best. This is the name given by Jonathan Gosthaldt in his book The Storytelling Animal, explaining how humans are simply primates trapped in Neverland. Our minds will travel

Financial Physics – Part III

15% profitability is your breakeven Why do businesses need a profit? To stay in business! Profits are used to expand, to invest in new ideas, to replace old equipment, and to hire new employees. Businesses that succeed reinvest and reinvent themselves because the world is always changing. If they don’t adapt, the business will fail.

Financial Physics – Part II

Never pay fixed bills with variable money In the second law of financial physics, we move our discussion to the importance of understanding cash flow. In my years of advising clients, I have noticed one main difference between those that find perpetual peace and those who don’t. It all lies in how they pay their