Cash Flow and the Small Business

After sitting through many lectures on finance, discounted cash flows, etc etc, it always seemed that the income statement and balance sheet were the focus of analysis and value creation.

Now, after traveling the country as a business consultant, and preparing many presentations for investors, I have a better respect for the statement of cash flow and cash flow forecasting. Part of the shift in focus is from the school's need to use static analysis of financials versus the reality of running a business day to day.

Since I am now in the operations side of business, I find that my skills in preparing pro forma statements of cash flow and cash flow forecasting is very important...the key to a company's survival. So how does this translate into your personal ROI you might ask? Aha, the key is in knowing once you enter the business world that the real engine of business is cash and the ability to generate it will make your finance career more bullet proof.

So if you can think along the lines of generating free cash flow for where you work then you are starting to get the focus of a finance person. And...if you can be the steward of creating free cash flow then you are really the master of creating shareholder value! Keep these shareholders happy and you will be successful. The prez will take you to lunch and life is good.