TODAY'S BUDGETING LESSON

"The spendthrift robs his heirs, the miser robs himself."

Jean de la Bruyère (1645-1696) French satiric moralist.

Just because you have funds allocated, unspent, does not mean you should spend them.

Just because you have funds allocated, unspent, does not mean you should not spend them. 

Money that, for good reason, should or should not have been spent, is equally waste.

Making Progress?

"There is safety in reserve, but no attraction."

Jane Austen

18th century English novelist

And in business as well.

You won't have an accident going zero miles per hour.

You also won't get anywhere.

It's Only (Their) Money

"When the well's dry, they know the worth of water."

Unknown

As an employee, how often (do) you think about the limitation of company resources available to support you all?

You should, every day.

Used For What?

"Wealth unused might as well not exist."

Aesop

5th century BC Greek fabulist

So many quotes imply something without directly saying what that is, this one included.

Is a company's financial reserves, "unused" or prudent management?

Sometimes, Too Much, Is

"We are stripped bare by the curse of plenty."

Winston Churchill

Looking back, I think I accomplished more in those situations where I had less than in those where I had more.

What about you?

Not What You Make, What You Keep

"Profits are an opinion, cash is fact."

Unknown

Each year my accountant and I would sit down just before year-end and plan how to close the books, taking into account the realities of income and corporate tax rules.

Nothing illegal, just maximizing what the company would keep. Obviously the less profit I reported the less tax I paid and while everything we did was legal, the process taught me how little value there was looking at a P&L when evaluating a company's performance.

Now I see a regular stream of start-up companies telling me not how much they will keep, but rather how much they will make.

There is a big difference.

Innovation: The Never Ending Need to Change

"I have never been in a situation where having money made it worse."

Clinton Jones

I can think of situations where having money does make a problem worse, in fact, many of them.

It does when management ceases to evolve their business because, they believe, they have enough cash to overcome whatever problems they have or will have.

That describes countless companies either now gone or soon to be, who, as recent as six months ago, saw no reason to alter how they did business given what they thought was adequate cash reserves.

Money, or lack thereof, is an indicator of past performance and the fact that a company has it does not mean they will in the future.