Cash flow is the lifeblood of a business

Here are 12 ways to improve cash flow in your business today: 1/ Ask for a Deposit

This brings cash flow into your business immediately which you can use to pay for expenses to service your clients

How to analyze financial statements in 4 simple steps: 1/ Horizontal analysis

-> What is it?

Helps you compare changes over a period of time

You can examine trends for every line item

You can examine growth rates for every line item

Debt is like a knife

It can be a powerful tool to generate wealth

Or a powerful tool to financial ruin

Here is how: A common piece of advice I got from my parents was:

Don’t take debt

I’ve always thought this was good advice

Risk management is the most important boring topic no one wants to talk about

If you rely on a 3rd party for a mission-critical aspect of your business, you need to pay attention to risk

Some quick thoughts: Business is inherently risky

Today it’s a bank (SVB)

Tomorrow it could be another mission-critical aspect of your business that goes dark

How will you prepare yourself to handle it?

Most experts will tell you that forecasting is a waste of time

I disagree

Here is why: A quick preamble before the Twitter mob comes at me

I will admit, forecasts are seldom accurate

Actual results always underdeliver or overdeliver

But they’re not a waste of time…

Naval famously said:

"We live in an age of infinite leverage"

Here is how to think about “leverage” in different businesses: 1) Labor

One form of leverage you can use is by having people working for you

Example:

A law firm

Hires lawyers as employees

Two simple metrics to help business owners make better and faster financial decisions:

(1) ROI
(2) Payback When you’re making thousands of financial decisions per day

You don’t have the time to sit down and do complicated analysis

Most economists are forecasting a recession in 2023

7 lessons about investing in a recession from one of the world’s greatest investors: Warren Buffet’s investment record speaks for itself

He’s made money during expansions and recessions

His investment performance since 1990 to date has handily outpaced the S&P500 by 5x

One of Warren Buffet’s favorite investment metrics is ROIC

Here is why: 1/ Whats is it?

If you’d like to invest in a company

A high ROIC is an indication of a good business to invest in

ROIC tells you how much profit is earned by a company for each dollar invested

Are you endlessly scrolling Netflix trying to find something to watch?

Here are the 7 greatest finance movies of all time: 1/ Wall Street

Can you even call yourself a finance professional if you haven’t watched this movie?

A classic film directed by Oliver Stone featuring Michael Douglas

If you’d like to grow your business

You need to understand Customer Lifetime Value (CLV)

Here is why: 1/ Whats is it?

In simple terms, Customer Lifetime Value (CLV) is the total revenue your business earns from each individual customer throughout his/her relationship with your company

The FTX blowup shows that some investors don’t understand the difference between:

(1) illiquidity and (2) insolvency

Grab a seat. Let’s go: 1/ Illiquidity

Let’s talk about the opposite for a second

What is liquidity?

If a company is “liquid” it means that it can pay its current liabilities using current assets

7 Money Rules to keep in mind in a recession: 1/ Debt

Interest rates are going up and they will keep going up from here

If you have high-interest-rate debt, start paying it down as fast as you can

Charging clients by the hour should be illegal

Use value pricing instead

Here is why: 1/ Quick disclaimer

Before the Twitter mob starts telling me that some lawyers charge out at $1,500/hour

I’m not saying that charging by the hour is totally wrong

It’s can be quite profitable in some industries like law

10 lessons about life you learn as you grow older: 1/ Age and Patience

The older you become, the more patient you become

The irony is the older you are, the less time you have.

Life is funny:

Old people are patient but have less time

Young people have time but are always in a hurry

Investing in 2022 has been HARD

The S&P 500 is down 25% YTD

Some lessons to remember when investing in hard times: 1/ Downturns create opportunities

“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.”

Warren Buffet

A year ago, I quit a 6-figure cushy job in Big Tech to work for myself

Here are some truths I've learned about building a business: 1/ Pricing

Pricing is one of the most important aspects of a business

When I took my first client, I created an entire financial model for $300!

My pricing was completely off. I was charging way too little!

7 Financial Metrics every business owner should know: 1/ Break even

Your breakeven number tells you:

How many units of a product you need to sell before you make a profit

One of the most important decisions a business has to make is:

Capital Allocation

What is it? Why does it matter? 0/ MO' money MO' Problems

As a founder, when your business becomes profitable and you start to build a cash pile in your bank account

The next logical question you ask yourself is:

What do I do with ALL this money?!?

If you want your startup to survive a recession

You need to understand Burn Rate and Runway: 1/ Burn Rate

A startup’s burn rate is the amount of cash it is spending each month

Let’s look at a simple example:

What is an Opportunity Cost?
Why is it important?

(short 🧵) We all try to optimize our lives because we have limited (1) Time and (2) Money

One of the ways to evaluate tradeoffs between Time and Money is by considering: Opportunity Costs