In John Maeda's book The Laws of Simplicity he discusses 10 laws he considers critical to creating simplicity in life and in business. Law #4 says: Knowledge makes everything simpler. Here is a quote from that portion of the book:
"Knowledge makes everything simpler. The problem with taking the time to learn a task is that you often feel you are wasting time, a violation of the third law [savings in time feel like simplicity]. We are well aware of the dive-in-head-first approach – "I don't need the instructions, let me just do it." But in fact this method often takes longer than following the directions in the manual."
He is making the point that it takes work to simplify a concept, a process, or almost anything for that matter. And sometimes investing a small amount of time on the front end (to gain knowledge) saves tons of time in the end.
Not everyone understands that Meyer's Law really is true, "It is a simple matter to make things complex and a complex matter to make things simple". That's one of the big reasons people find simplification difficult. It takes some work to simplify almost anything. And it takes some work to gain the knowledge necessary to simplify something.
Understanding Cash Flow Is No Different
Most business owners and managers consider cash flow a difficult and time-consuming process. It's true that it is one of the more complex components of a set of financial statements prepared in accordance with Generally Accepted Accounting Principles.
But cash flow can be simplified.
And it can be simplified to the point that you only need to spend 10 minutes a month to understand what happened to the cash (and cash flow) of your business last month. Do that for three months and you will be amazed how much knowledge you gain about your cash flow… and how much better you understand your financial statements.
What is Step 1?
Take your numbers for last month and drop just a handful of them into the Cash Flow Focus Report. (Here's an example of me dropping JC Penny's numbers in the Cash Flow Focus Report.)
You can also watch this webinar recording that walks you through the Cash Flow Focus Report and also download the Quick Start Guide (both at no cost).
Try it. You might just discover that knowledge really does make understanding cash flow simpler. J