LEADERSHIP STRATEGY: CASH FLOW VS. WEALTH BUILDING
Chief Seattle
An indigenous American, Chief Seattle (1780 – 1866) gave a widely publicized speech arguing in favor of ecological responsibility. His iconic quote, “important decisions should be made through the eyes of seven generations—from great grandfather to great grandchild” has retained its appeal because a critically important question is left unanswered, “what decisions are important?”
When executives respond to this question, a dichotomy between long term goals and managing current priorities always surfaces—this dichotomy appears when families plan as well. The long vs short issue should be addressed before serious discussions begin. When I facilitate a forward thinking session, I begin by asking participants to comment on the relationship between cash flow and wealth. The response is always a variation of: “cash flow relates to short term survival issues, whereas wealth building focuses on the movement towards the preferred (longer term) future.
Most people want to move towards their preferred future (build wealth), but first, they must do what it takes to survive today. The majority of business bankruptcies occur because the owners run out of cash—not because their initial dream was faulty.
The following analogy drives home the relevance of cash flow as an essential component of wealth building. Imagine a person with the discipline and tenacity to remain focused on; nutrition, fitness, and emotional wellness. A well-conditioned mind, body, and spirit enhances the probability of success but it does not assure success. Locked in a room without oxygen, the fit along with the unfit will die within three to four minutes. Having an oxygen tank available outside of the locked room will be of no value—continued existence demands immediate access to oxygen.
The metaphorical relationship between cash flow and wealth building underscores a dream’s tenuous dependence on the effective handling of current realities.
P{osting sponsored by The Baton Management System