Get the Hell Out of the Hourglass – Part 10

“Revenue is vanity, profit is sanity, and cash is king.”1 That’s what Alan Miltz says, a co-founder of Cash Flow Story and co-author of Scaling Up.

This is a wise principle for all business owners who value their company’s safety. But of course, there are other factors to consider besides growth and the use of money. Today, we’ll talk about cash alongside balance, growth, and succession. Yet, when I think of the reasons we get stuck in an hourglass, not having cash tops the list. Keep liberating yourself from the hourglass with balance and growth.

Balance

We all need balance; I still need more in my life. I desire excellence as well. So, balance in pursuit of excellence! I want to go to my kids’ soccer games, take a vacation, and have dinner with my family every night. However, I also want a $10 million business. The only way to do both is to not have it all dependent upon me. We’ll get in deeper on balance in the Cascading Leadership series this August.

Discipline is also an ingredient in balance.

It is absolutely required. Balance doesn’t just happen by itself; you must want it and be disciplined. David Campbell, the founder of Saks Fifth Avenue, says, “Discipline is remembering what you want.”2 He is right.

Growth 

There are three sources of capital that you can use to grow your business:

• your own money
• a lender’s money
• the company’s money.

I prefer the last one; it is called bootstrapping. The business will tell you how fast to grow. I advise that you, as the leader, simply take a modest salary and leave the profit in the industry.

Only grow as fast as you can organically attract great people and build resources! 

It’s dangerous to borrow money! I am not saying never to borrow money, but only for a specific piece of equipment or a truck; that’s it – hard assets only! I don’t borrow much. Some businesses, like mine, are low margin, so grow slowly, I say.

At Nolan Painting, we divide up all the money as it comes in, and then it is dispersed through automatic deductions. After Monday’s bills and Friday’s payroll are paid, everything else is dumped into reserve accounts, retirement accounts, equity accounts, insurance accounts, and profit accounts  – nothing is left!

Essentially, we are broke every week, and therefore, we are always hungry.

I remember many times when I thought we were growing too fast. It comes in fits and starts. It is not linear, nor like a faucet where you control how much comes out and how to turn it off and on. Yet, following this method, we have grown during 40 out of the last 43 years (except for a few severe recessions and a pandemic). You can experience steady growth and balance, too, as you free yourself from the hourglass.

Some of you are doing business with customers who require extended payment terms. I get it. In this case, you will want to use a line of credit. Be sure that the line is used as working capital, not debt. It’s important to pay back your line in the year you take it.

See you Thursday. Build Muscle.