Cash is more important than profit.
Even a profitable company can struggle without generating sufficient cash flow. I worked with a highly successful residential plumbing company for several years- who doesn’t need plumbing? Clients must be falling out of the sky, right?
But there was a problem: the firm had taken on a huge commercial plumbing project, and the firm had lost money on the client. It was so much money (and lost cash) that the firm struggled to make payroll each month. Eventually, the owner brought in a partner, who invested the cash needed to operate each month.
Businesses have to forecast and monitor cash- it’s more important than profit.
If you’re recovering from a financial setback, this article may help.
Failure is necessary for success
Failure isn’t simply a risk that must be managed- it’s necessary for success. That’s because failing causes you to get up off the floor, assess what went wrong, and try again. You gain wisdom from failure- far more than you acquire from succeeding.
So go fail- at least a little bit.
Get free sample chapters of my ebook: How To Save, Invest and Manage Debt.
You can’t create intellectual property and post it as an asset
If you spend research and development money to create a new product, you may be able to acquire a patent on your idea. Keep in mind, however, that you cannot post an intellectual property asset to your books for products you create. You can only record an asset for intellectual property that you purchase.
If you’re not feeling confident in your abilities, consider these inspiring facts about successful CEOs:
- Walt Disney: In 1919, Disney was fired from his job at the Kansas City Star newspaper because he lacked imagination and had no good ideas.
- Jeff Bezos: His first-ever job was running a summer camp that he founded with his girlfriend.
- Mark Cuban: Was a disco dance instructor in high school and through his early college years.
Unusual products that were hugely successful
This company is a trash removal service, particularly for large items, such as furniture and appliances. Dozens of franchises and millions in revenue. Why? There was no large company offering this service.
Drybar, a women’s salon that specializes in low-cost blowout hairstyling, had estimated annual sales of $60 million in 2014.
The Snuggie, the blanket with sleeves, had sold over 30 million blankets.
The Pet Rock, selling for $3.95, was one of the most popular Christmas gifts in 1975.
Unusual facts: Standard and Poor’s 500 index
Stock Market Facts
Seeking Alpha (a great website) points out these unusual facts about the stock market:
- Wall Street was laid out behind a 12-foot-high wood stockade across lower Manhattan in 1685. The stockade was built to protect the Dutch settlers from British and Native American attacks.
- You must own a seat on the New York Stock Exchange (NYSE) to trade stocks. The highest price paid for a seat on the NYSE was $2,650,000, in 1999 (when the market was near a high point before the tech stock crash). The lowest price paid for a seat, was $4,000, in 1876
- The NASDAQ Stock Exchange began in 1971. At that time, its main focus was on Over-The-Counter (OTC) stocks. The name is an acronym for National Association of Securities Quotation. NASDAQ quickly became the exchange of choice for many technology stocks. NASDAQ stock symbols generally have 4 or more letters (Microsoft: MSFT).
This article was originally posted to my Quora page:
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
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