Sofa winning over gym, every time (why isn't everyone doing this?)

When a friend read my article from September about raising capital from customers, she immediately “got it”. It was so obvious to her that the only follow up question she had was: “If it makes so much sense, why isn’t everyone doing it?”

This really made me think. While finance is not an exact science, it is true that there are things that are pretty straightforward and measurable, and come with clear recommendations. Obvious no-regret moves that will put your business in a better place. Shortening the cash conversion cycle is one of the many examples of this.

So why don’t people do these things?

I think there are three main reasons. As a founder, you’re either:

(1)  Not aware of these concepts.

Almost no one starts a business because they’re excited to start managing its finances. And if you’re not aware of a concept, you probably won’t go even Google it, let alone implement it in your business.

By writing Tiny CFO, I’m hoping to address this issue by surfacing ideas that every good CFO is familiar with but very few founders are – even though they could benefit from them greatly. You can then decide if it’s something that you want to follow or not, but at least you’ll have the choice.

(2)  You’re aware of the advice but don’t implement it – perhaps because it’s not clear where to start, or the whole thing is a bit out of your comfort zone.

I get this. I am out of my depth in plenty of other places – just watch me trying to figure out Instagram.

But the thing is, everything is a learning curve, and taking baby steps now is better than nothing. This could be as simple as starting to forecast your cash flow (always where I recommend starting). Or having a look at your profit and loss (P&L) each month and trying to spot the trends. And then take it from there.

A bit like exercise, doing some of it regularly even if imperfectly is better than staying on the sofa and watching Netflix. And I say that with the full authority of someone who is very fond of her sofa.

(3)  Maybe you’re a bit conflicted about the whole profit maximisation narrative that underlines most finance advice.

Maybe you started the business out of passion or to solve a specific problem, and maybe you’re concerned about corporate greed and don’t want to be like them.

To that I say – I hope your business will be super successful. You sound like someone who will pay their people well and their suppliers on time; who will be seeking to support their community, have a positive impact on the environment, or support important causes. One of my business heroes is Dan Price, the CEO who went viral by implementing a $70K minimum wage at his company. I don’t know Dan, but I know what he needed to do that: a financially successful company. What better motivation to build one than wanting to be like Dan. For the sake of the change you want to see in the world, please consider building one too.

Which one of these sounds most like you? I’d love to know.

Love and cash flow,

Jana

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