Cash Is Key For Businesses

03/04/2012

By Lara Morgan, Author Of More Balls Than Most

All business owners must think very seriously about equity, and do so right at the start. Today I endlessly hear company owners considering the sale of equity as a method of growth.

Indeed, often I find that companies have been established with a split of equity being poorly thought through, with a lack of real appreciation for what the value of each individual share could stand for in the future. Pacific Direct started with a hundred shares that were worth nothing. It sold for £20,000,000 — with each share worth £200,000. Please think through...

...very carefully, at the set-up stage, exactly who has what in equity shareholding. Please, and at all costs, do everything to find alternative financial means — at nearly any price — rather than surrender equity for cash.

Equity is your most valuable asset, and equity dealers cannot build businesses which is why they trade equity. It is your sweat, tears and worry that create equity value — so relinquish it slowly. You may have to starve a little to hang on tight to high levels of equity, but it will be worth it.

Although I was by no means perfect, my understanding of the importance of money and my paranoia on knowing the numbers served me exceptionally well. On any given day I could have — off of the top of my head — given anyone an accurate immediate overview of the debtors, creditors and cash in hand. I am lucky in the sense that I remember numbers well, but I worked at that ability. I’ve always liked the impressed reaction when I can remember to the penny the important and not so important figures (including any unpaid children’s pocket money).

When I first started Pacific Direct — and right up until... continued on page two >

 

 

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