Cash is king. Cash is KING. CASH IS KING.
Always believed it, in my bones. Today (with COVID-19) it’s even truer than ever. I don’t care if you’re a business owner or an employee. Cash bails you out on a rainy day. Cash allows you to weather the storm… Cash lets you play to win, while others play to not lose…
The businesses that are really suffering during this period of Corona Virus, are those that don’t have enough cash to weather this period. Owners can’t afford to pay their bills and their employees indefinitely. They may need to make tough choices – shut down for good, cut pay, or lay people off. And employees are afraid of being laid off, because they can’t afford to pay their bills indefinitely without income. No judgement here. I’m just being frank. Cash is the difference between the winners and losers. *Credit is a little hard to obtain, but having a good credit rating is always an advantage too.
Fee. Profit. Profit margin. Return on Sales. They all create cash. Not revenues…. Let me repeat, forget revenues. Revenues without profit are vanity metrics. The only time that revenues matter with small profit margins are when the contracts are very, very large… For example, a 5% profit margin on a $1B contract — that’s a big fee –$50 million… But on a $1 million contract, that’s only $50,000…. Think about the difference to your business if you double that profit… or QUADRUPLE it… $100M or $200M on the $1B contract, and $100K to $200K on the $1M contract… That’s a huge difference and a direct cash injection into your business.
I know that some GovCon companies accept the razor-thin margins, while other companies make high double-digit margins.
What is the difference between companies with a good business case versus a bad business case??? The difference is ignorance versus experience in execution. I know that sounds BAD but it’s 100% true. Ignorance is your enemy. I’m a member of a few online communities, and the topic often shifts to how much fee they should charge… I’m not knocking anyone here, they just don’t know anything about fee. They are 100% doing the right thing by reaching out and asking. The first step is admitting you don’t know something and asking people who might.