If you are an Entrepreneur you have probably heard the saying“Cash is King” so much you can see the words in your sleep. As a business owner you are focused everyday on maintaining and growing your business. You are the Head Ninja in Charge of keeping track of the books, selling the product and managing personnel, but what about the long-term prospects of the business? What about your own retirement?

Profitability is the most elusive goal within any business venture, but it’s only the first step to padding your nest egg.  Once your business hits the black, your next step should be optimizing your cash. Whether you’re a billions dollar conglomerate or a barber shop in the Bronx this is for you. 

Essentially you need the money that you’ve made from your business working just as hard as you do. It’s not enough to put your profits into a checking or savings account. Many banks now offer business owners the ability to work with a specialist in cash or treasury management. Depending on the needs of your business, the amount of money being invested and the time frame in question, you and the bank specialist will determine what the best method of investing your dollars is. These investments may include Money Market accounts, short-term treasury bills or other low risk debt obligations. The rate of return you earn will depend on the amount invested, the investment you choose and how long it’s invested.

Many banks won’t assign you a cash management specialist until you reach six figures of investable assets, but that does not mean you have to wait to start making your money work. Even at $1,000 you can start investing in CD’s(commercial deposits). The costs will vary according to the amount invested, the product chosen and the time frame. As a rule of thumb, the larger the amount invested the lower the cost. Never forget that you can shop around to find the best deal. It is important to develop relationships but don’t let the relationship you’ve developed with your bank prevent you from maximizing your dollars.

Put together a plan

Even before you start making profits you need to have a plan for what you will do when the cash comes in.  Here are some things to consider with investing company cash.

Ø      Create a time line for your business; identify your 3-5 year goals.  This can assist you in determining how aggressive you want to be with your cash optimization strategy.

Ø      Don’t take the money if you don’t need it.  Many business owners have a habit of robbing their own company for money they don’t even need.  Focus on building a healthy balance sheet by keeping some cash in your business.

Ø      Research different investment vehicles that will help to get you closer to your goals.  If you’re not sure where to start, check us out on Molifeney.com and we’ll assist you.

Ø      Stay the course.  McDonald's didn’t become a billion dollar business over night, and neither will you.  Making money is a process, but as long as you stay involved, aware and educated you should see your cash on cash returns grow.

Following these steps should make sleeping at night a whole lot easier.  As Robert Kiyosaki the author of Rich Dad, Poor Dad says: “The future is created by what you do today, not tomorrow” 

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