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Had a conversation about cash flow with a very astute friend of mine the other day. I told him a lot of CEOs thought they understood cash flow, but really did not. So he needed to challenge them to go after 20% more cash generation from existing levels of business. That would motivate them, because my friend really knows how to do it... in many different areas of the business. Now JP Morgan and others announce the economy isn't going to grow much if at all. That's code for double dip, folks. So would you like to generate 20% more cash from existing levels of business? Do you know how? Are you confident your people know how to execute what you know or frustrated that they can't?

YOUR BUSINESS IS A MACHINE THAT CONVERTS CASH TO MASS TO CASH AGAIN.... AN ENERGY CREATOR.

Every organism, person, animal or organization converts energy into mass and then energy again. Your business takes money, puts it into mass (Fixed asset and working capital) with the intent of transforming that working capital into energy (CASH) again... energy can be used again. It's LIQUID. The idea is to create the most ENERGY with the least MASS.... avoiding trapping it in MASS or worse yet, trapping it forever. So CASH GENERATION is the ultimate efficiency measure for your company and everything you do contributes to it (or NOT).

He went on to ask me if he should split up his offering into cash generation and then profit improvement. I said NO... keep it all under cash generation... because he was talking about helping independently owned businesses... not publicly owned businesses. (Public businesses should worry much more about cash flow, too... but focus on EARNINGS to keep the stock price up.)

Automating the warehouse that allows you to trim the workforce by 20% on a 15 person workforce saves CASH MONEY NOW. Three people times maybe $40,000 of fully loaded employed costs. Overhauling your matrix pricing to get higher margins on non stocks over the standard "20" that is so inadequate, will be profit improvement... but it collects more CASH relative to the transaction EXPENSE... it's all about CREATING MORE ENERGY WITH THE LEAST MASS - FAST TRANSITION OF CASH TO MASS TO CASH.

So yes.... above all... please do express everything you can in terms of CASH GENERATION from every process, every department, every transaction, every relationship. Of course, we need to make investments... but they are supposed to generate CASH AS FAST AS POSSIBLE.

WHAT IF THE FED ADDS QE3?

Oh, yeah, the old trick of buying treasuries with digitally created money and then charging interest to the American taxpayer for money made out of thin air. First of all, it's fraud, right? Second of all, they get away with it anyway. Third, The FED is not federal, but a private institution. But that's not relevant. What's relevant, is it will cause inflation when there is more money out there relative to the existing level of goods and services to buy. Inflation is bound to rise... and if the dollar is sidelined as the world's reserve currency, other countries businesses won't need to buy dollars to buy imports any more. Demand for dollars will plummet, and prices will... are you ready for this.... DOUBLE.

So if you collect on the sales you made two months ago... and the price went up 30%.... replacing the inventory will cost 30% more..... vs yesterday's collections that are now woefully inadequate to cover inventory replacement.

This, my friends, if we are in fact going into a double dip, and also a nasty inflationary period... IS ABSOLUTELY CRITICAL TO START WORKING ON AND IMPROVING NOW!!!

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