There is a traditional Chinese proverb that goes something along the lines of, “Do not take the seeds and throw away the melon”. Though there are many ways you can approach this, and multiple lessons that can be extracted from reflecting on it, it can be particularly sage when it comes to running a business and allocating the cash flow from that business. One of my favorite examples comes from The Coca-Cola Company.
When you are managing your business, your life, or money, the true test of your ability and talent will come during the bad times. Have you managed your liquidity well enough so that even the worst depression won’t wipe you out? Have you conducted yourself with restraint so you don’t find yourself buried under interest expense on credit cards and store accounts?