Financial Foundations, Part 3 – Numbers CAN be Changed

12 June 2015
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Categories: Dollars & Sense

This is the third installment in a series on the foundations of finance. If you haven’t already, I suggest that you start with the first post at this link.

Friends, I have wonderful news! We have tremendous control over whether or not our businesses are making money. In my first post, I said that a business must be make money, meaning that after expenses, there is money left over. Not break even, but money actually made, put in the savings account to prepare for a rainy day or to invest in the business. Today, I am saying that we can manage our numbers through business decisions, influencing our customers, or by direct control. Let me explain.

First, while we cannot control our customers, we can influence them a lot, and probably more than might first be apparent. For example, when deciding to have a sale, a business is trying to influence its customers to make purchases. Or when a business experiments with a new product line, it is testing to see what its customers think. And based on the feedback from them, it enables the business to respond with product offerings that will get them to buy and at a price that seems fair to them and increases revenues. In addition, marketing campaigns are a business’s efforts to influence customers and potential customers. So while we cannot control income, we certainly have tools that our disposal to manage the different components that increase it.

Second, we really do have control over expenses. Okay, there may be a couple of situations that we cannot control, such as when the IRS comes and seizes assets. But at the end of the day, it is a personal choice of whether to spend, what to spend on, and the timing of the payments.

I realize that this is a shorter post than usual, but it really is an important mindset change.  We do have the power to influence and change numbers, so let’s exercise that power to create stronger, healthier, vibrant businesses!