Steps to Management Success – Step 102: As Wallets Grow, So Do Needs

STEP ONE HUNDRED TWO

As Wallets Grow, So Do Needs

When things are going well and your corporate coffers are flush with cash, you may be tempted to purchase things that you really don’t need. The image that comes to mind is a picture I once saw of an out-of-business dot-com, its many recently purchased computers and Aeron chairs neatly stacked, awaiting a bankruptcy auction.

WHAT IT MEANS: It’s one thing to reward the high achievers and dedicated managers who helped you post record results for the past quarter, but don’t go overboard. Another way to phrase this rule: it’s easier to spend money than to make money. Once you’re basking in the glow of prosperity (temporary as it may be), all kinds of ways and means of spending money will inevitably present themselves. Some of them may even be worthwhile. Your responsibility as a manager or entrepreneur is to husband the company’s capital as if it were your own—and possibly even more prudently! Your flush status may be a precious opportunity for you to pursue projects that can continue to keep your growth on the fast track. Use it accordingly.

ACTION PLAN: Develop your budget and modify it judiciously when necessary, but strive to stick to it. Delay impulse purchases by allowing a three-day “wait state” as a buffer for such impulses to cool off. Favor those expenditures that invest in the future of your business rather than those that titillate your ego. Don’t let a windfall compromise your fiscal responsibility.

EVEN BETTER: Consider saving such windfalls for a rainy day—or for a highly promising new project not yet discovered. Having some discretionary money in the bank is an advantage that few growing businesses have, and it can make you a much more attractive candidate to bankers and prospective investors.

(Excerpted from: 10 Clowns Don’t Make a Circus. . . and 249 Other Critical Management Success Strategies by Steven Schragis and Rick Frishman)