The #1 Piece of Business Knowledge Entrepreneurs Wish They Knew – Part 1

This series is fueled by a single question asked to successful entrepreneurs:

“What is the #1 piece of business information you wish you had known when you were younger?”

Today’s answer: Money management training.

What does “money management”  mean?  Here is some detail from successful  successful Chicago-based entrepreneur Seth Frey:

“Sales and marketing were really easy to me. That just came naturally. As far as money management, that was harder. Even when I had my ice cream truck in college I still didn’t get it.   I would think, ‘Oh, we have $1,000 in cash.  Let’s pay off all our vendors.’  What I should have done is had more of a cash flow strategy.  For instance, I should have extended terms with the vendors and held the rest as a cash reserve.”

Suggested readings and discussion questions for the classroom to the boardroom:“Wish you knew” Module #1.

1. What does Seth mean when he says he should have “extended terms” with the vendors?

2. Read the article at the below link:

http://ezinearticles.com/index.php?Protect-Your-Business-with-These-Cash-Flow-Rules&id=1031911

Design a discussion around the four header topics of the article (e.g., what does each category really mean, and proposed action steps for each).  How does what Seth did seem to be in line, or different, with the advice in the article?

3. Read the below articles and/or search for additional ones using terms such as “cash flow”, “small business”, “best practices.  Each participant should find their top article, and summarize the top 3 money management tips in that article. Narrow in on cash, accounts receiveable, etc. as needed.

http://beginnersinvest.about.com/cs/investinglessons/l/blles3intro.htm

http://entrepreneurs.about.com/od/financing/a/finstatelender.htm

http://www.balancepro.net/education/publications/moneytipssmallbusiness.html

Templates

Cash Flow Budget Template

Source: www.Toolkits.com

Breakeven, Cashflow, and Startup Cost Template

Source: Bay Area Community Foundation

 Balance Sheet Template

Source: US Chamber of Commerce

Profit & Loss Template

Source: Microsoft templates

 For more on financial planning exercises, see the Young Entrepreneur Foundation Entrepreneur in the Classroom “financial plan” curriculum in Module 3. Here is more on the free EITC curriculum.