This month, I had the pleasure of speaking directly with Fred G. Parrish, founder of The Profit Experts and co-author of The E-Myth Chief Financial Officer: Why Small Businesses Run Out of Money and What to Do About It with Michael E. Gerber.
There are those of us who still hold tight to our copy of The E-Myth. For me, it was The E-Myth Revisited in the early 2000s. Today, this book is at the top of my list. It delivers all of the essential elements of the original E-Myth but specifically directed to the role of the Chief Financial Officer, responsible for driving the financial wellness and strategic financial plan of the business.
One of the takeaways I’ll pass along to you is found in Chapter 10: The CFO and Managing People. On the topic of keeping your team well informed and driven toward the same objectives, Fred Parrish recommends making sure everyone in the organization understands these three basic principles:
- “Cash is the lifeblood of business. …You must have sufficient cash available to fund the company’s operations until the profits can be converted to cash. …Without cash conversion, there is no real profit. Therefore, it would follow that cash flow is the true profit indicator.”
- “Profitability and Cash Flow are inextricably linked. You must have profits to produce cash and you must have cash to produce profits. The cycle cannot be broken indefinitely without seriously negative results.”
- “There is no free lunch. Ultimately cash will be required to purchase each item you consume in the business… and that cash will have to come from somewhere.”
We are committed to helping clients streamline their cash conversion cycle to achieve financial stability via invoice management and finance.
A few resources:
- Get the book on Audible
- Videos of Micheal E. Gerber and Fred G. Parrish with regards to the E Myth CFO
- More information on The Profit Experts
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