Someone once asked me when I first discovered I had a talent for business. In hindsight, I realized it probably started when I was in junior high. I had a very different childhood than most (but didn’t realize it at the time).
As a kid, I walked around the 6th grade playground wearing one of my favorite T-shirts. It was a bright yellow and had black text on the front that read, “Happiness is Positive Cash Flow”
When I shared this story recently to a group of small business CEO’s, someone blurted out, “Victor you must have been a babe magnet!”
My reaction, was hello… 7th grade… ya remember it?
Maybe as an adult cash attracts people, but in the 7th grade. It was the anti-babe magnet.
Actually, most the kids had no idea what the phrase meant. The teachers did, but they scratched their heads a lot because they couldn’t figure out why I was wearing it.
Well it has to do with my mother. Yes, my mom.
My mom taught me lots of things as a kid. One of them was the importance of cash and cash flow in a business.
You see my folks were business owners like you and me. They started one of the first computer stores in San Diego, CA in 1978 selling Apple computer. Yes 1978!
To put that in context, the IBM PC computer whose predecessors now run things like Microsoft Windows
was invented in 1981, IBM hired a company that’s now called Microsoft to create an operating system called DOS (these days called Windows) in 1980.
In 1987, there was huge stock market crash. You might recall losing 30% of your investments in 8 hours. Yeah, that was a bummer for sure. At that time, my mom gave me first finance lesson.
She said, “Victor, you see this paper here. This is called a balance sheet. It’s the balance sheet for Apple Computers.”
I looked at her, like umm okay Mom, like where are you going with this.
“You see that number there…”
Yeah, it’s got a lot of zero’s next to it.
“Well that’s how much cash Apple has in the bank”.
Well compared to my savings account book (remember those), I had like $7 bucks and Apple had well a whole lot more.
Then she looked at me with that that “I’m deadly serious” look that only Mom’s can give.
“When you have enough cash in the bank, you can NEVER go out of business. Remember that!”
“Um, okay mom… like whatever… ”
But I DID actually remember that. And her message was simple, when the amount of cash you have in the bank exceeds what you owe the bank, you can’t go out of business.
(If you don’t believe me ask the CEOs of Blockbuster and Borders what they think… both are on pace for bankruptcy by end of this year)
Sounds simple. Heck, my 10 year old brain remembered it… but yet, few companies actually pull this off.
And how do you get a lot of cash in the bank?
Well, have your business generate positive cash flow of course!
So I came across this T-shirt a few months later and thought it was a good reminder of Mom’s wisdom:
1) Brush your teeth every night
2) Stop hitting your brother (even if he deserves it)
3) You’d better have a strong balance sheet or I’m going to smack you upside the head someday.
So I wore it around school lot, you know that anti-babe magnet that I was in the 6th grade.
Now as an old and wiser adult, I know that happiness doesn’t come from positive cash flow (though the elimination of financial stress certainly does) but it’s an excellent reminder none-the-less.Tweet