Logic vs Human Behaviour
I was talking to a good friend of mine recently who I know regularly donates blood.
I know that because he posts on Facebook whenever he does it. So yesterday, I asked him, how much blood have you donated?
He said about 40 L.
I said holy crap, the human body only has 5 L’s Chris!
He quickly said “I usually give about half a litre every time.”
Clearly it would be impossible for Chris to give 40 L in one sitting. He would be a gonner.
Even if Chris only donated 1 / 3 of his blood, say 1.5L, in one sitting he might suffer some tough consequences.
But since he donated half a litre of blood per visit, his body hardly notices it and he can donate several times a year without missing it.
After years of deposits to the blood bank his donations have piled up, and now he’s donated a stunning 40 L or 8 x what he has in his body right now.
The moral of the story is this:
Cash is the lifeblood of your business.
Shouldn’t you treat your money like the blood of your business?
Just like blood is often required in a medical emergency, a business in financial trouble often requires an infusion of capital.
You never know when a patient will need a donation of blood, but with a pool of easily accessible blood reserves, the chance of survival dramatically increases.
Sometimes your business problems are predictable. Other times they will blindside you.
With a source of easily accessible cash the chance for business survival dramatically increases.
Do you see the value in regularly donating business cash flow to your reserves?
The best system is to become a Cash Rich Business.
What do I mean by this?
Every time money comes in to your business (and I mean every time) automatically transfer a percentage of the money into a separate account.
Just like with half a Litre of blood, a healthy business will hardly feel the withdrawal. In fact if you do it first you will never miss it. I like to call this reserve a Profit War Chest, just like Pirates of the Caribbean and a parrot on your shoulder.