Cash flow, cash reserves, and profitability have never been as important as they are today.
Our society has been enamored by venture-backed companies that focus almost exclusively on revenue growth. That means some businesses are being exposed like never before.
Even though everyone knew the good times couldn’t go on forever, many business owners still didn’t prepare.
We can debate how long and deep this COVID-19 financial crisis is going to be or the length of the recovery.
In the meantime, let’s get back to basics in business and focus on building sustainable enterprises that are set up for market cycles.
I learned early on in my career that the intrinsic value of a business or investment is determined by the cash flows it generates. Since then, I’ve focused more on cash than many of my peers.
Warren Buffet once said regarding ownership in businesses, “Our favorite holding period is forever.”
It’s impossible to run a business forever if you can’t weather a few economic storms along the way.
From my experience, the greatest source of confidence as a business owner comes from having cash flow from operations and cash reserves in the bank.
Cash Is King!