March 10, 2008

Growing Your Business: Are You Making Business Decisions?

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All decisions in business are either business decisions or they're financial decisions. If you're flush with cash, and you have the ability to do anything that you want, then you'll be making good long range strategic business decisions every time. But most companies are not so fortunate. They aren't flush with cash, and they aren't able to make good long range strategic decisions every time they put on their thinking caps.

Instead, most companies are cash poor. Most companies are thinking about this week's payroll when they should be thinking about the big picture. Unfortunately, their cash position prevents them from always making smart decisions. It's my goal when I work with companies to help them properly finance themselves, so that they don't find themselves in a cash strapped situation where they make short-term decisions that they'll be sorry for in the future.

I regularly hear from entrepreneurs that they feel like they are "chasing their tails." Part of the reason they're chasing their tails is because they're not doing things in the right order. They're not doing them properly. They're not buying equipment that's going to last for the long term. They buy equipment for a short term application when they know they're going to have growth immediately. They end up wasting more money in the end, and they have no way to get into the long run because they don't have the cash to do it right in the beginning.

If this scenario describes you, then you need to think very carefully of refinancing in order to better finance your company. You need to think about the many different ways that you can use the assets that you have to leverage yourself into a more powerful and more positive future.

All of the decisions that we make in business are either good long-term strategic business decisions or they're based on the amount of cash that we have in the bank or based on the amount that we have access to. If you find yourself making a decision based on limited cash resources, be extremely careful and make it your highest goal to solve the problem, so that you can start thinking about the long term.

So, as you are working hard every day to build your company, or as you're building your career, and you notice that you're chasing your tail, making short-term decisions, or making decisions that you're sorry for not long after you make them, take a hard look at your capital structure. You may find that nine times out of ten, you're making financial decisions and not business decisions - and this relates directly back to how you organize your company's finances.

About Joel G. Block

Well known in the business community, Joel Block is a best selling author, speaker, and business strategist. Frequently a principal in his transactions, Joel has raised tens of millions of equity dollars for his ventures, which have included real estate syndications and privately held businesses.

Joel’s career is highlighted by the launch of a financial publishing company which he grew nationwide and later sold to the Los Angeles Times. More recently, Joel works with scientists, engineers, technologists and others to help them optimize their entrepreneurial opportunities. Would you like to get a private phone consultation with Joel? Visit www.joelblock.com/capital for details.

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