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  • Acumen Learning

How to Impact Cash

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Cash is fuel. Without it, the engine of a business can’t run, the various moving parts can’t function, and eventually the business slows down and dies. But for businesses flush with cash, the engine keeps revving faster and faster. In a 1979 interview, Fred Smith the founder of Federal Express said, "People thought we were bananas. We were too ignorant to know that we weren't supposed to be able to do certain things" (New York Times, January 7, 1979). Federal Express's first two years were grim. In fact, on its first night of business, the fledgling company shipped only 186 packages onto its 14 Falcon jets routed to 22 cities. It was not uncommon for Federal Express drivers to dig into their own pockets to pay for gas. Despite Fred's $84 million in start-up capital (another term for cash), Business Week reported that within a few months of delivering his first packages in March 1973, he was desperate for cash. The challenges and risks of starting a major global business were significant. Federal regulations were severely hampering his efforts to compete with the U.S. Postal Service. Suddenly, he didn’t have enough cash to cover a $24,000 jet fuel bill. So what did he do? He went to Las Vegas and played the blackjack tables. He won $27,000 and wired it back to headquarters. Fred's company was the first American business to hit $10 billion in profits…and you know the rest of the story.

I wouldn’t recommend using this strategy (blackjack) to get cash for your business—or your life! But it’s tempting for people and businesses to take risks when they need cash now to ensure future survival.

Depending upon your role in your company, you will have different opportunities to impact cash. Just remember that fundamentally you can impact cash by increasing revenues (cash in) or reducing expenses (cash out). For example, if you’re in sales or marketing, you can help generate more cash faster by increasing sales revenue. If you work directly wit