Fuelling Up

If you think back to the Introduction, where I first posed this metaphor of flying, you’ll remember that the fuel was the cash every business needs. The importance of the production of cashflows cannot be overstated. Firstly, there will be the injection of grubstakes to get the business going, usually from friends and family, with further rounds of investment as time goes on.

It is vital that this cash is subject to very careful husbandry, so that it is not wasted, which is why cash- flows form such a vital part in the provision of the overall budgets. If you still have cash, you’re still in business. If you run out, you have to stop. Thus, intense focus on cash, at all times, is compulsory rather than optional. Because running out of fuel can have disastrous—usually terminal—consequences.

It’s interesting to me, when we have so much focus on money, that we usually fail to understand important questions around its psychology. It isn’t a simple case of numbers going up or down. Wealth is as much about wellbeing as anything else. It’s not just about piles of cold money. It’s about our families, our homes, our health, our friends, our leisure, our community—as well as our career, and finance itself.

Would you drive a car at speed, in the dark, without your headlights on? If the answer is yes, you’ll need more than this book to help you. But, even if you would not do that, you would be in good company if you tried to run your business with a financial blindfold on. Because that is exactly what most small businesses do. Another reason why so many of them fail.

Thinking about money boils down to three key things: making it, keeping it and growing it. All of those things need learning. We also have to decide if we want to be broke, comfortable or rich. And if that sounds over- simplified, it’s because humans tend to over-complicate.

We usually aren’t taught how to be comfortable and smart with money from a young age. As a result, through an absence of understanding of money, many people have a very odd relationship with it. They may fear it, they may hoard it, they may spend it like water, they may be pennywise and pound-foolish, they may have wildly varied attitudes to risk. Quite commonly, they will be in denial, not wanting to talk about it, brushing it aside. Any of these attitudes are clearly unhelpful and contribute to the tragically high scrapheap of business failures.

It would be as well for governments to address this issue, and try to help relieve those worries, rather than leaving it to individuals to learn about money, as best they can, from parents who, in all probability, suffer from the same fears and thus pass them on, or schools, which are silent on the subject, and, almost certainly equally ignorant about it—and for much the same reasons. We are treated to all sorts of subjects at school which are vastly less important than ‘Financial Understanding,’ a subject title I have just made up, and don’t think appears on any school curriculum.

Against such an unhelpful background, it is little wonder few aircraft receive the right fuel. Before you wade in blindly and begin making inevitable mistakes, consider—with great honesty—what your own relationship with money is and, where a little learning and insight might help you.

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