My friend and colleague, Jeff Sacks, often says, “Profit is an opinion, but cash is cash.”
Many years ago, from Karl Singer, if memory serves me, I first became aware of the term “cash is king.” Initially, it referred to customer money and the impact it had on our gross profits. While that's still applicable today, the term has taken on a broader significance.
Have you ever found yourself in a position where your business was profitable but lacked working capital? I have. After having to make quick trips to the auction to wholesale retail inventory in order to make payroll, it didn't take long to figure it out.
In other words, this scenario didn't happen too many times before I figured out that only cash was really cash.
Being profitable does not necessarily mean being liquid. That is why a profitable company can fail from a shortage of cash.
A way dealers can avoid that situation is to be sure your inventories are in line with your actual and expected sales.
Inventory turn is a great barometer of your actual dollar-amount inventory levels.
Do not allow your accounts receivable to get out of hand and grow beyond an ability to pay or to the point where other businesses are operating on your much needed cash.
Do not accept anything less than a strict adherence to the policies set by management.
In recent memory, the term cash is king has never had a stronger meaning than it does today.
“What Life's All About”
Jack is a wonderful 15-year-old who was enjoying his summer with friends and family when suddenly he suffered an arteriovenous malformation (AVM). This led to bleeding in his brain. For 19 days, Jack was in an induced coma.
After more than a month, Jack took his first breath off the ventilator and was breathing on his own.
During this period, a group of Chrysler dealers ordered a supply of “Battle Back Jack” rubber wrist bands to support this young man. Dealers began distributing them as part of a fund drive.
Jack's parents created a blog and updated it on a daily basis so their friends and family could follow Jack's progress.
On the blog, at about the 60 day period, it was noted that almost 4,000 wrist bands had been distributed. On day 72, it was noted that Jack was being taken to Chicago to the Rehabilitation Institute of Chicago.
Soon after, another blog noted the fund had collected more than $8,000. More than 8,000 wrist bands had been distributed including almost 3,000 to Chrysler Financial. These funds and more were donated to the Children's Hospital, Ronald McDonald and Caringbridge in Jack's honor so that other families could also benefit from their resources.
On October 21, during a 20 Group meeting in Chicago in which Jack's father was participating, he quietly slipped from the meeting room. No one questioned his absence since he had come straight to the meeting from the hospital and we knew he had slept little the previous night.
A couple of hours later, the meeting room doors opened and in walked Jack followed by his parents. The meeting stopped and each of the 24 persons in attendance stood and applauded. There were numerous hugs for Jack and a group photo session with him.
Nodding towards a smiling Jack, someone said, “Right there is what life's all about.”
There wasn't a dry eye in the room. Each one of us knew we had witnessed a miracle. I spoke with Jack's father in November. He tells me Jack will be able to be home for a special holiday.
I work with so many great people in this industry. On behalf of all of us at NCM, Dealer Service Corp. and Jeff Sacks & Associates, we wish you a great holiday season and a peaceful, prosperous 2009.
Good selling!
Tony Noland is the president and CEO of NCM Associates,Inc. He is at [email protected].
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