Powering Your SMB: Tips for Better Cash Flow

Introduction

Welcome to my blog! I aim to help small business owners improve their company from a financial perspective.

Who I Am

You may research me and point out I only graduated in May 2023, lack years of perspective, and you are better off seeking the help of others with more experience. So why should you listen to me?

Well, first, I hope you appreciate my transparency.

For some background, I completed a Bachelor of Commerce – Honours in Investment Management at McGill University, receiving the Dean’s Honour List award. During my time at university, I began my professional career working part-time, and during my summers interning at firms that invested in publicly traded companies. However, my first taste of small businesses was during an internship where we looked at much smaller companies. I realised that most small businesses are not implementing or are simply unaware of fundamental financial principles. Seeing the opportunity to add value for SMBs, I got a job on the corporate development team of Harris Computer, a subsidiary of the publicly traded Canadian company Constellation Software. While the company keeps a low profile, it has an outstanding track record of improving the finances of the companies it acquires. The historical success of Constellation is what attracted me to the company, and is my primary source of hands-on learning.

My Job and Interests

Every day, I work on acquiring, growing, and improving SMBs. The job gives me exposure to the everyday problems of small businesses. While we only buy small software companies, I believe the fundamental principles of finance are applicable no matter the type of business – with different adaptations for respective business models.

Secondly, I have a thirst for business knowledge. Over the past few years, I have read, analyzed, and absorbed what I learned from books, articles, research publications, newspapers, and podcasts on business history, entrepreneurs, investors, and financial psychology. Consuming such material has allowed me to learn a great deal from the wisdom of notable businessmen, businesswomen, and financiers, as well as their key mistakes and successes. My aim is to enable you to understand and implement these learnings, making your business stronger by standing on the shoulders of giants before us.

Finally, the success of this blog depends on my ability to help improve your business. If my blog is not useful my effort will be lost and I will have gained little benefit. Our interests are aligned.

So... What Are The Financial Aspects of Business?

Now, I hope you are curious to continue reading. As you know, a business is many things including its: products/services, employees, customers, and the humans making everything work (the human being part is often forgotten). However, for small businesses, the financial side is usually an afterthought – if thought of at all.

Businesses are very much financial entities. Entrepreneurs risk money invested upfront to build their business. Part of the end goal is to receive profits from the money that was initially invested. Unfortunately, hard-won dollars are often thrown away into low-yielding, unprofitable lines of business never to be seen again. Or your investments are being held inefficiently on your balance sheet! This is the equivalent of lighting money on fire. If you like losing money well… you are probably in the wrong place.

Profits are the only compensation you receive for being an entrepreneur. Therefore, finance is about maximising the ratio of A) profit made to B) the risk you take. Every dollar that you invest (risk) should be used to produce as much profit as possible – this concept is otherwise known as Return on Investment (“ROI”). Brace yourself, you are going to be dreaming of ROI after we are done.

Your Business, Your Rules

Let me get one thing straight. I am not going to tell you how to run your business.

You are more knowledgeable and understand your business/industry better than me. Unless you sleep under a rock every day – then I favour my odds, and I would kindly ask you to share what is the easiest way to get started in your business

My mission is to use my leanings in finance to help improve your business. Take your initial investment (time, money, and knowledge) and convert it into a higher-yielding, time-enduring, cash-generating machine. The financial aspect of business is not just looking at sales and expenses. Among other things, the finance includes capital investments, balancing debt & equity, managing working capital, and most importantly, Return on Investment.

It is also important to mention that improving finances does not have to be at the expense of your customers, your employees or your product/service (pun intended). In fact, often improving your finances will put you in a better, more stable position to better service these stakeholders.

Closing

If you decide to follow my blog, I ask just one thing of you – think for yourself if my ideas make logical sense for you and your business. If the ideas do not, challenge me as to why! It is my job to constantly improve my thoughts and understanding. Any opportunity to learn from you is invaluable to me, and others.

In closing, I promise you, my reader, I will do my best to provide sound insight. However, there will be times when I realise my preconceptions are just misconceptions. Rest assured, you will be promptly notified and I will unashamedly admit my mistakes – we are all human after all.

“I constantly see people rise in life who aren’t the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed a little wiser than they were when they got up.”

– Charlie Munger