Making Your Money Work for You
How founders should think about money management
Whenever I helped my dad with his small business, he always reminded me to respect money. “Business makes money, and money makes business”, he used to say. It is true that cash is the oxygen of a businesses. But unlike oxygen, cash doesn’t just exist freely around you. It must be earned, managed, and protected.
Here’s the hard truth: Poor cash management, not lack of customers, not bad ideas, is the #1 reason businesses fail. In fact, over 60% of small and medium-sized businesses cite cash flow as their biggest challenge. And for startups, it’s even worse - most failures within the first five years happen because they run out of cash.
Yet, in the startup world, cash management takes a backseat to fundraising. Raising millions in funding is often seen as a bigger milestone than building a business that actually generates and sustains cash flow. But no matter how much capital you raise, eventually, all roads lead back to managing money wisely.
I’ve spoken with some of the smartest founders and their CFOs about how to make money into a tool for growth, rather than a source of stress. Here’s what they shared.
1. Use Cash Forecasting to Guide Business Strategy
A cash flow forecast doesn’t need to be 100% accurate, but it does need to be informed by the right assumptions to be useful. A strong forecast helps you prepare for different scenarios - make smart hiring decisions, time investments properly, and prepare for slower months.
To build a strong forecast, you need to:
Know your revenue model: subscriptions, one-off sales, commission-based income? Each has different cash flow dynamics
Distinguish between cash inflows and revenue: just because you made a sale doesn’t mean cash is in the bank
Time your outflows carefully: timing matters. Large expenses at the wrong time can choke your business. A founder once told me: "If I had paid more attention to my cash flow, I wouldn't have hired too fast—and I wouldn’t have had to lay people off later."
2. Track the Right Metrics (Not Just Your Bank Balance!)
Most founders check their bank balance daily. But real financial control comes from tracking the right numbers. These are the ones that matter:
Gross Profit Margin: Are you making enough per sale after covering direct costs?
Burn Rate: How fast are you spending cash? Essential for early stage startups.
Customer Acquisition Cost (CAC) vs. Lifetime Value (LTV): Are you spending too much to acquire customers?
Accounts Receivable & Payable: How quickly are you collecting payments vs. paying suppliers?
Debt-to-Equity Ratio: Are you over-leveraged, or do you have room to borrow for growth?
3. Separate Operational vs Strategic cash
Many great business opportunities like acquiring a competitor, launching a new service, or securing a bulk discount require quick financial decisions. If all your money is mixed together, it’s harder to act fast.
The smartest founders I spoke to separate their cash into two categories:
Operational Cash = Salaries, rent, marketing, and daily expenses
Strategic Cash = Growth investments like hiring, expansion, or new product development
If an opportunity comes up, you don’t want to hesitate because you’re unsure if you can afford it.
4. Have an emergency fund
A few years ago, I saw two businesses in the same industry go through COVID. One had an emergency fund. The other didn’t.
One survived and adapted.
The other shut down.
Even the most profitable businesses can be thrown off by unexpected disruptions whether it’s market downturns, equipment failures, or delayed client payments. The best way to stay resilient is to set aside 3-6 months of essential expenses:
Automate transfers into a savings account each month to build it without feeling the pinch
Keep it separate from your main business account (so it doesn’t get used for everyday spending)
Be disciplined about when to tap into it - only for real emergencies like major revenue drops, not for new projects or marketing experiments
Parting thoughts
At the end of the day, business isn’t just about making money - it’s about what money allows you to do. The founders who master cash flow don’t just survive downturns; they seize opportunities, expand on their terms, and design businesses that work for them (not the other way around).
Want to take a vacation without worrying if the business will collapse? Money gives you that option.
Thinking about hiring a game-changing employee before your competitor does? Cash reserves make it possible.
Dreaming of selling, pivoting, or stepping back? A well-managed business lets you decide when and how.
The founders I admire most aren’t just great at making money - they’re great at making money work for them.
So the real question is:
Is your money working for you, or are you working for your money?Need support as a business owner?
✨ When you’re ready, here’s how I can help
Business Advisory Service: Consulting service to help business owners solve complex problems and scale their companies. My areas of expertise include: strategy planning, revenue growth, costs reduction, entry into new markets or launching new products, team management, operational efficiency, and thought partnership.
P.S. If this resonated with you, share it with your network of aspiring founders, entrepreneurs, and business leaders