Time or Money?

Is $1,000 a lot of money? Is $100,000 a lot of money? What about $1,000,000? Would Kerry Stokes, owner of Channel 7, really watch a show like 'Deal or No Deal'? The highest possible prize is what he earns in less than a week? Would you watch a show where the highest possible prize was what you earned in a week?

My point is, for most financial information, talking in absolute dollar terms is pointless as there is no relativity. The figures need to be related to some other measure. What I have discovered is that using time instead of absolute dollars is the best measure when gauging an issue. From, how much should I pay for this business?, to, how much cash should my business retain?

The reason why time is such a powerful measure is because everyone has 24 hours in a day. And you know how long it takes to generate your level of income in any given time frame.

The Espresso Shot: Instead of saying you have $x dollars in the bank, express it in terms of how many months of expenses the cash covers. I can assure you, your idea of money will evolve for the better.

What have I done to deserve this?

I had an amazing day yesterday wrapping up a client's 2009 accounts. Amazing in the fact that I completed a fairly complex set of accounts. Unfortunately it wasn't good news for my client. 2009 was not the best year for the business. When presented with the final figures, he asked, "Sam, I truly believe in Karma but what have I done to deserve this?

Instinctively I said, "It's not what you did, its what you didn't do."

Luckily he took it in the spirit I intended it and he agreed. Soon after I realised it goes for everything in business. So you want turnover to increase by 20% or you want profitability to double in 12 months. Be sure that you brainstorm all the necessary actions required to achieve it. Then tick them off one buy one while always asking, "Is there anything I'm not doing that I should be?"