Whether facing 60-mile-an-hour winds on a glacier-encrusted mountain, or driving a car at night in the road spray of a Seattle rainstorm while passing a semi, or watching your organization’s spreadsheet and cash flow take a nosedive when a competitor under-prices you in a commodity market… knowing what the basics are, and keeping your focus on those basics above all else, offers you your best chance of survival, recovery and success.

Not paying attention to basics can cause you to crash and burn.

Aviate • Navigate • Communicate

In flying an airplane, Aviate • Navigate • Communicate, in that order, are the very first things you must do to be prepared for The Unexpected, and handle it well when it happens.

First things first: Aviate… get back to basics. Or… you can crash and burn! Not much else matters in life or in business if you lose track of the basics by getting distracted by interesting but unessential peripherals.

For a pilot, that means first and foremost, “fly the plane!”

2 Basics of Business

For a business, a non-profit, and an organization of any kind (dare we apply this to the government, too?), you simply must get, and keep, the two Basics of Business under control:

  • Cash Flow, and
  • Quality of Product/Service.

Everything else… marketing, sales, personnel, stock, R&D, facilities, planning, etc… is built on one, or both, of these two basics.

Seven days ago, Forbes author Steven Bertoni posted an article titled, Why Square Needs To Sell Itself–And Do It Quickly. onforb.es/1k066Kv…

You’ve seen the little square that plugs into a smart phone, a tablet, or an iPad? The guy who thought of it is the same guy that thought of Twitter, Jack Dorsey.Square Reader

The clock is ticking for Square. Jack Dorsey’s payment start-up is burning through massive amounts of cash as it tries to scale its payments business. Today the Wall Street Journal–citing unnamed people in-the-know– reported that Square lost $100 million in 2013 and is quickly eating up its $340 million supply of venture cash. Because of the cash bleed–Square is seeking a suitor desperately.

The profit margin for Square is very slim. If you purchase $100 worth of lattes, the article explains, Squares net is only 55 cents! And they’re not the only ones out there doing what they do. They’ve got competition.

For a viable business, Square needs to scale its way to massive payment volumes. That’s why Square is trying to sell itself to a rich owner with enough cash to survive the cash bleed as it hunts for larger customers.

And Square may not make it without selling out the company. With cash draining, they tried raising investment money but failed, so they went into debt, borrowing more than $100 million.
And you?

Small companies have to be just as careful to watch basics like cash flow. In fact, without positive cash flow, you’ll probably go down even faster because you may not have the connections, the network, to try to draw from. When you run out of gas, you’ll glide, but not as far.

One inviolable rule for your business or organization (or personal finances) is, “Don’t spend more than you make.” If you stick to that one, simple, old-fashioned rule, when you face The Unexpected, you won’t be going down because you’re out of gas.

I learned this (the hard way) when it appeared I was doing so well! In my video production business, we won bids to exclusively tape hundreds of figure skaters at the Ice Skating Institute World Championships in Boston one year and St. Louis the next, and we made over $40,000 in a week, two years in a row. A few months after the second event, I wondered why we didn’t have enough to pay the phone bill! So I did what I should have done from the get-go and ran a spreadsheet… where I discovered that the expenses of producing those week-long multiple-sheets of ice, with a camera and sales crew of 15, paying their wages and travel and lodging and meals, paying for extra equipment rentals, and around 1000 video tapes, etc., etc., my NET after all that was only $1500… for four months work!
Back to Basics!

Knowing the actual cash flow, and the actual net profit, the decision was easy… the 4-state area we served was where the profit was. No more big, fancy, impressive, feather-in-our-caps, world-class jobs that sucked too much gas from our small financial tanks.

Ever happen to you? How did it turn out?

 

You want to do more than survive. You want to SOAR!
Aviate • Navigate • Communicate
compass-rose x100w

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