In the Four Decisions, the process proposed by Verne Harnish for fast growth companies, the 4^th decision is “cash.” 

If you go to the Gazelle’s web site, they have work sheets (“Gazelle’s Growth Tools”) for all four decisions:  People; Strategy; Execution; Cash.  These are good, useful, helpful work sheets.  And the trained, constantly learning Gazelle’s Coaches stand ready to help you as you work though all four of these process issues, to help you become a more successful, fast-growth company.

(They are worth downloading, and working through very carefully.  And, they are free!  But, experience has shown that when you add the “expense” of hiring the right Gazelle’s coach to help you with this process, and then to implement the process, your success efforts are definitely improved.).

But, (and, I admit – this is a personal comment), this “cash” issue is one of the hardest to get right.  There are many reasons.  First, the lack of money can be incredibly draining, as we all know  — emotionally draining, and really, draining in every way.  Second, getting enough money can be incredibly difficult.

Let me tell you a story from my wife’s real estate days.  She was a licensed agent, but always worked in support positions on a very successful real estate team.  She observed agents come and go in the industry, and once made this simple observation:  the agents who best weathered the real estate down times were either the very best agents to begin with, or, more likely to be people with “another” source of income (e.g., people with a retirement income, or, a married person with a spouse who had a stable income). In other words, they had something to “fall back on” when their own real estate cash flow was not “much.”

So, about this cash issue…  The Gazelle’s Cash work sheet is good, and focuses on the following — ways to improve your:

1)    Sales Cycle
2)    Make/Production and Inventory Cycle
3)    Delivery Cycle
4)    Billing and Payment Cycle

For each, they have three “checks” – Shorten Cycle Times; Eliminate Mistakes; and Improve Business Model and P/L.

Here’s an observation – I have presented synopses of good business books, at least one new book a month, every month, since April, 1998.  Call me up, and I can suggest an abundance of good books on:  People; Strategy; Execution.  And Leadership; and Communication, and Design, and…

Now, ask me about a good, best-selling, well-known business book on cash.  …I’m thinking; I’m thinking…  Let’s just say that the best-sellers lists have been pretty devoid of such books.

In other words, this is a tough one.

Oh, there are plenty of books on what went wrong in the 2008 crash.  Really good books.  And they have all sorts of warnings about how to make really bad money decisions.

But, a book that really does help you solve the cash issue?  Not so many – this is a little tougher.

But, I do have one strong suggestion.  It comes from two sources:  Sam Walton, and Jeff Bezos.  Sam Walton lived this way.  Jeff Bezos copied Walton.  In fact, Mr. Bezos has a worn, underlined, annotated copy of Walton’s biography, and he swears by this.  Here’s the principle:

Be frugal!  Really, really frugal.

Spend the least amount of money possible on anything and everything — except what will grow the business.

In the Wal-Mart version of this story, the offices at headquarters are incredibly modest and sparsely appointed.  In fact, it is not uncommon for people sitting in meetings to have to pull in a box to sit on – each office has only two (modest) chairs for visitors.  (You can read about this in The Wal-Mart Effect by Charles Fishman).

In the Amazon version of this story (from The Everything Store by Brad Stone):

“Bezos built the first two desks out of sixty-dollar blond-wood doors from Home Depot, an endeavor that later carried almost biblical significance at Amazon, like Noah building the ark.”

Here’s the approach.  Yes, you do have to spend money to make money.  But, spend only what you have to spend, and nothing that you do not have to spend.  Don’t waste money.  Use the money you have to improve (speed up) cycles, to speed up the delivery of products and the collection of money, and to hire the right people.  Get your cash in – as quickly as possible.  And then, be frugal, and spend what you spend very wisely, to help you grow your business.

What you do to get cash, then to husband cash, and then to spend cash, and to get more cash in more quickly in your effective business processes…  this is the fourth decision.  Bad strategies to get cash in, bad use of cash, foolish cash decisions – these can all be deadly.

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So, you have four decisions to make.  (Make that five).  (Remember, the first four come from Verne Harnish, and the Gazelle’s Coaching organization).  Here are your first four:

Decision #1 — Have you put together the right people on your team?
Decision #2 — Do you have them doing the right things?  In other words, do you have a workable, challenging, but reachable strategy?
Decision #3 – Are you executing your strategy?
Decision #4 – Do you have the cash coming in, and are you using it wisely?

Coming next, the fifth decision — one of my own.