CASH FLOW & OTHER MATTERS
A Presentation by Chude Jideonwo, Managing Partner Red Media Group at Enterprise
Creative’s Freelance Friday on 12 April, 2013
The matter of managing finances concerns discipline. People say creative people cannot be disciplined – but without discipline, the world’s
best companies won’t exist.
Facebook’s Mark Zuckerberg even takes this lesson to the extreme:Hunting all meat he eats one year.Wearing a tie to work every day in another.
“On Milner’s investment; he told Mc Clean of Vanity Fair magazine, that he had found someone who was not only a visionary but someone who will figure out monetization in short order.
“He said: “I saw somebody who was clearly a genius and who was on a mission. You don’t really meet those people often and its always a miracle when you meet such a person.””
www.vanityfair.com: Q &A with Russian investor, Yuri Milner
Steve Jobs – ultimate icon for many creative in
business – knew the one division of the business he couldn’t mess with was of the Chief Financial Officer (CFO).
People talk about creative processes, creative ideas – the one placer where it becomes a negative adjective is Creative Accounting
Nowhere is discipline more important when it
comes to back ends of a business: Human Resource and Finance (people & money).
The deal is: you can have a viable company with bad human resources and a great idea, but with bad finance, nothing dey happen.
Your front end can be sexy and dynamic but your back end must be solid and firm.
Principles remain always inviolable no matter
how the world changes. Ideas don’t rule the world; ideas well managed
and executed rule the world. (Facebook vs. Groupon).
Any random genius can make money – but not anyone can keep making money.
Business is centred on profitability- simply put, INFLOW over OUTFLOW (and enough inflow to constantly ensure outflow doesn’t catch up).
THE FOUNDATION
The only thing that should dictate your actions
as a business person or how much you spend at the club is your Profit & Loss account, not ‘personal branding’.
NAMES WITHHELD:
The reality show executive who spent all the money staying in five star hotels, couldn’t pay salaries and had to go beg sponsor for more money.
The talented OAP who spent all her money buying jewelleries and advertising income couldn’t catch up with her expenses.
TV company that is promised sponsorship, spends millions without cash flow, sponsor pulls out a day before – company spends 2 years recovering. Thankfully, company learns from its mistakes, and has bounced back stronger with a different outlook to spending.
THUMBS DOWN!
NEXT: Plenty of investment capital Bloated salaries Sky rocketing overheads Weak cost control Crippling loans Very little advertising
www.globalnemsnig.com: How NEXT boss wasted 20 million dollars
Sim Shagaya founded lots of companies - iNollywood, Gyst - with admirable creativity, significant spend but muted revenue… took those lessons to Konga and focused on profitability.
“Business is a transaction” – Shagaya.
THUMBS UP!
With Mnet, everything leads to money – everything makes money. New markets keep evolving despite its hugeness. Tight workforce maximizing profits.
The challenge of “over-creativity”. Where the creative focuses on the pleasure of
producing talented work – but that is of no use to consumer or client because it is above budget, beyond deadline or not functional.
TOO CREATIVE FOR YOUR OWN POCKET
Apple's profits depend on these efficiencies as much as great
sales or reviews: every product or part stuck in a warehouse is a part that costs money instead of making it. It was Apple's inability to get this part of the business right in the mid-1990s that hurt it as much as product stagnation and a losing war of attrition with Microsoft.
Jobs's and Cook's post-1997 mantra, "slash inventory, shut warehouses, run manufacturing close to the bone" became a path back to profit. Along with other innovators like Dell, Apple established a new high bar for the electronics industry:
Article from www.wired.co.uk on “Why Tim cook is the best choice to run apple”. Retrieved 4, April 2013.
His genius wasn’t just product development or marketing, it was
money making
Marketing - continuously bringing in money, Management- disciplining your finances, Debt- debt kills, kill debt.
3 MAJOR TRIPODS FOR A BUSINESS
“Entrepreneurs must have
two eyes focused on the skies but two feet firmly on the ground.”
The Creative Visionary