Your time has tremendous value. Every minute you squander is unique in the history of mankind, and you can never get it back again. Time is your only non-recoverable asset. In a service business, your entire success hinges on understanding this little-recognized fact. And there’s no line on any of your financial statements that accounts for time. I

The less inventory on hand, the more efficient the use of cash. Smaller batches built with greater frequency will always produce better cash flow and fewer excess or inadequate inventory problems.

First, have the accountant or bookkeeper print a Net Income Statement of the business every month, typically after all sales and expenses for the month have been reconciled. Go over it line by line, just like we did in this chapter. Break it down until it makes sense to you.

They’ll say, “Here are my sales projections, here’s what it’s going to cost me, and here’s how much money I’m going to make.” That’s very nice, but they’ll go broke before they get there. Why? Because they only budget their expected profits, not their expected cash flow. In a start-up business, you can be losing money and still stay in business if

•Don’t take on debt for the business and your personal life at the same time. The bank cares about both.

It’s absolutely essential to know the unit cost for every product the company sells. This is the direct cost of materials and labor required to create a saleable product whether that product has been sold or not. Unit cost is the same as COGS for product that has been sold and shipped out the door.

•Try to find strategic partners that have quick turnarounds for building inventory.

Before a sale, the only place you’ll see the value of that inventory is on the Balance Sheet under current assets on the inventory line, valued at what you paid for it, as COGS. As soon as some of that inventory is sold, however, inventory on the Balance Sheet decreases because the customer walked out with the product. Inventory decreases, but you

•To add insult to injury, if a customer does pay its bills to the business and then files for bankruptcy within 90 days of that payment, under the “Preference Payment” rules, the trustee overseeing the proceedings might seek court intervention to return that cash payment to the debtor’s estate. In short, even after a business gets paid, the cash pa