I remember an advertisement promoting a certain brand of gasoline that asked the question, "What's in your engine?". The message of the ad was that their brand of gasoline was better than the competition. Why? Their brand made the engine run cleaner. When the engine ran cleaner it was more efficient and needed fewer repairs. Thus their brand was the choice of "smart" car owners.

In the business world, businesses are often compared to engines. The fuel (gasoline) that runs the engine of your business is cash. So I ask you the business owner, "What's in your engine?'. Or in a more straight forward question, "What kind of cash is used to run your business?"

Just like there are different brands of gasoline, there are different "brands" of cash. There is borrowed cash (debt), there is investor cash (stock) and there is cash generated from business operations (profit). So the next question is, "What is the best brand of cash to run your business?". Each brand has advantages that are unique. Debt allows the existing owners to maintain their current level of ownership. The price paid for debt is in the form of interest paid for the use of the money and abiding by the loan covenants that may come with the loan. Stock may require the payment of dividends instead of interest. There are no loan convenants that come with cash generated from issuing stock. When stock is issued to raise the cash, the current owners are selling a portion of the business. Many times they will be left with a minority interest in the business. Cash generated from profit requires no interest or dividend payments, there are no loan covenants and the owner gets to maintain ownership of all of the business. In the long term, cash generated from profit is the best "brand" of cash to run your business. It is the brand of choice of smart business owners.

At B2B CFO® we help businesses maximize profit and cash flow in their businesses. We help the business operate more efficiently. Just as cash generated from profit is the "brand" of choice for smart business owners, B2B CFO® if the CFO of choice when your are seeking CFO services on an as needed basis. If you have questions or want more information about how to improve the profit and cash flow in your business, contact Dave Davenport at ddavenport@b2bcfo.com.

What runs your business? Cash generated from Debt or Stock or PROFIT?