Cash Flow Management
In order to stay in business, it's important to have the fundamentals right. A very basic fundamental is managing the cash flow of the business. Cash is literally the life blood of a business. If a business isn't adequately capitalized, it won't survive.
Many
businesses are founded "on a shoestring". They grow by reinvesting the
earnings of the business. If the owner(s) withdraw the earnings to support
a lavish lifestyle, they have put the cart before the horse. Most
businesses experience cycles of good times and bad times, growth and
retraction. Without accumulating a "war chest," the business will be
unable to survive a downturn. Further, without reinvesting earnings, the
company usually will be unable to exploit the opportunities of the good times by financing expansion.
Many of the founders of companies that are now prominent lived modestly, even after their companies became successful. Some examples are Sam Walton, David Packard and Bill Hewlett.
These people habitually avoided extravagance because they were focused
on building something significant. The financial systems of their
organizations are exemplary. They recognized that managing the finances
of their organizations was fundamental for survival and growth.
It's good to enjoy the fruits of your labors - after the harvest. But don't consume the seeds for next year's crop.