In case the threat of recession does not recede, heed this radical advice: Don’t be seduced by fancy financials. Just follow the (real) money.
This simple financial strategy works wonders when times are bad. Or good.
What is the ‘best’ measure you can use to check your ongoing financial health? A measure that is extremely effective during times of trouble such as downturns and recessions? A measure that applies equally to organizations and to individuals?
Come to think of it, it’s also the best measure during good times.
Cash flow is the simplest and the sanest measure of financial health. Simply answer these questions: Does your organization bring in more money than it pays out, yes or no? Do you earn more than you spend, yes or no?
The problem, of course, is that cash flow is easy to measure but difficult to manage. Nevertheless, it is worth the effort, because there is an unexpected bonus for you if you succeed. Decrease the cash that goes out and increase the cash that comes in, and you will decrease your stress and increase your energy.
Improve cash flow and you improve health, yours and your organization’s.
Welcome to my side of the nonsense divide.