Why I used to hoard cash (a confession)

Around 6 years ago, I had a conversation I never forgot.

A conversation about business cash.

It went like this:

  • Friend: “Olly, how much cash do you keep in your business bank account?”
  • Olly: “Right now we have about $XXX.” (it was a lot)
  • Friend: “Oh, you keep a lot too? Glad I’m not the only one!”

Now here’s the bit I remember:

I felt smug.

That’s right – I distinctly remember feeling smug that we were holding so much cash.

Today, this horrifies me!

Not because it’s rather distasteful to feel smug, but because…

I was so clueless about money!

At the time, we were holding equivalent to our annual revenue in cash.

For a growing business that is pure insanity.

I think my business would be 5-10X the size if I had learned to use cash properly back then. (Because growth compounds over time.)

So I imagine I go back in time and give younger Olly a pep talk…

Here’s how it would go…

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Look, Olly…

Here’s why you’re feeling smug about having cash:

It makes you feel safe.

You never had any money before.

So seeing 000s in your account gives you a sense of security. You won’t be sleeping under a bridge any time soon!

But you’ve got to evolve.

You’ve got to move from scarcity to abundance… to learn how to utilise cash.

Here are some of your options:

  • Invest back into the business
  • Spend on education / mentorship
  • Put into an investment vehicle
  • Create an emergency op-ex fund
  • Distribute and invest personally
  • Fund available annual tax breaks & allowances
  • Generate a return on the cash

Spending cash on any of these things will make you more money further down the line.

A lot more.

Oh wait – you don’t know how to do these things?

Then go figure it out, dammit!

But don’t just hoard cash, and let it sit there like a snowman in a sauna, losing 5-10% a year to inflation…

Money is like water – it needs to flow. If it doesn’t flow, it will find ways to escape… and cause you way more problems in the future.

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Namaste,

Olly