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Patterns of healthy business: Cash flow

Taking analogy between business and living organism further, cash flow is like breathing. An organization with problems in cash flow inwards and outwards indicates a very dangerous situation. Breathing also part of being in active relation with the ecosystem with continuous exchange.

Money is the oxygen for any business. Hardly anything can be done without exchange of money within and outside. Short supply of money can be fatal and impact is immediate. This situation is result of poor performance in sales or lacunae in management of finance, or both. Impact of failure in sales is immediate, resulting in a cash crunch. Also, resources may quickly be drained out with poor financial management, leaving the organization gasping. This demands quick action with both departments working in tandem.

Note that quick does not mean adoption of desperate, ad hoc measures. Desperate measures could be too visible from the market, revealing the rot within. This makes business even more vulnerable and such measures could set the business on a tailspin especially under weak health.

What is required, at this stage, is intensive care with quick remedial action and close monitoring.

Elementary, right? Are you surprised why I am discussing this here? Can a business man, an enterpreuneur, or a professional manager make such mistakes? Fact is, there are surprisingly many business which fiddle around in these areas. There are tell-tales signs visible to trained eyes.

Watch out before decide …. to invest or work with

October 9, 2009 - Posted by | Business, Management, Patterns, Uncategorized

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