Why Do You Run?

It’s the question that gets asked of the runner so many times.  And it’s actually also the question that is hard to answer.

Why do you run?

I really had to give it some thought.

For me it goes back to childhood, when I enjoyed running; road, track, little athletics.  And back then it was just for fun.  I wasn't the fastest but it was enjoyable.  There was always the attraction of running in something like Sydney City 2 Surf.  But growing up in Dubbo it was a long way to go to enter a run.

So about 5 years ago, once I'd decided it was nigh time to get back into a fair level of fitness, running came as a key part.  To then be able to run the City 2 Surf was a bonus.   And the thrill of having just completed my second marathon in a not too shabby 3:21:24.  Plus there's been half marathons and other races in between.

But back to the original question, as I ask if of myself  - Why do I run?

There are a few answers, apart from "it keeps me fit" and "it helps keep my weight under control";

• It’s simple.  I just need a pair of shoes and the odd tap here and there for a drink.  I can run wherever in the world I happen to be.
• Because I can.  The time will come one day when knees, hips or general decrepitude will stop me running.  But until then I’ll keep on clocking up the Ks.
• It gives me time to think.  Running allows my mind to wander without being interrupted.  It’s a great opportunity to give business thinking some free rein.
• I like runners.  Generally speaking, we're nice people to hang around with.  We have a positive outlook and tend not to whine too much (blisters and cramps aside).
• I like myself better when I run.  I just feel good.
• It makes me feel like a kid again.  I remember when I used to run everywhere just for the sheer joy of it.  There was never any reason to stop just because I “grew up”.
• Discipline.  It’s old-fashioned, I know, but we need some discipline and routine in our lives.  It’s amazing how following a training program for a marathon keeps the mind focused.
• It’s fun, especially on those rare days when the world seems to spin under my feet and everything is effortless.
• It shows me I have the ability to suffer and suck up pain, which is much underrated in our comfortable modern world and sets me up for when times get tough.

So with an entry in for this year’s New York Marathon, I’d better get the shoes on and get moving.

Preparing A Three-Way - Budget that is

What can a business can do to make sure it is profitable and successful?

Without doubt, using an annual process called the Three Way Budget.

So What Is A Three Way Budget? 

A Three Way Budget consists of projected profit & loss, cash flow and balance sheet. The business owner then asks "What would we have to do to make these numbers come true?"  This is the Aim of The Game.

Cash flow drivers hold the key to strategies to make sure there is enough money in the bank to generate profits to keep going. If the Three Way Budget is worked out correctly, all three statements should balance (i.e. 'talk to one another'). You then have a clear picture of not only what your anticipated profit will look like, but also the amount that should be sitting in your bank account and finally your business's overall net worth. This is very very powerful and will give you an understanding of what areas you may need to 'tweak'.

What Are The Steps in Getting Your Three Way Budget Completed?

Firstly, work out how much profit you would like to make using past and present information (such as management accounts, financial statements, changes in your industry, numbers of existing customers, average invoice value, number of transactions per year etc) and define your period to achieve these financial goals. This is usually done over 12 months although I also recommend that you start 3 years out and work backwards.

Secondly, establish what effect this profit will have on cash flow (the life blood of any business) and whether the business needs to have an injection of capital at some stage and/or introduce strategies that will improve money in the bank.

Finally, as a result of having information about the first two items, work out how much your assets and liabilities should improve by, after dividends, drawings etc and the make up of these assets and liabilities (a snapshot of your balance sheet).

Why Do I Need a Budget?

Many business owners think having a budget is a waste of time often because the future is almost impossible to predict.

However, if you set your budget to a desired level (not just last year plus 5% for example), you can then drill down and work out what sort of things you would need to do to achieve these results. This becomes a very powerful brainstorming session with your business partners, advisors and team who will now be thinking 'outside the square'. Questions like "These are big numbers but what would we have to change in order for us to reach these numbers?". (Get your team involved and watch how motivated they will become as being part of the solution).

Of course if you are looking for finance, a carefully prepared Three Way Budget will impress your financial backers (whether they be the banks and/or investors) and increases the chance of monies being injected into your business whether it be at the start of the period or during the term of the projections as identified. Remember, it is always easier to get finance where you have determined it well in advance, rather than waiting on a crisis and then going to your financiers cap in hand. It also shows them that you have thought about the impact of your goals in advance and actually plan your affairs very well. 

Why Do I Need to Look at Cash Flow?

Please be aware that whilst making a profit is a very good start, you CAN in fact go broke making a profit!

This is because the surplus may not always be converting to cash quickly enough meaning that there is not enough money to keep the business going into the next month, quarter or year. Cash flow stress can be due to monies not being collected quickly enough from your customers (customers are also known as debtors when they are given credit terms), invoices not being sent out in a timely fashion (left in the tray, billed at the end of the month), a hold up in work progress, paying suppliers too quickly (suppliers are also known as creditors when you are given credit terms) or when profits are tied up in stock for future sales or in slow moving stock items. You also need to make sure that if your business has debt which may have been created to make these numbers happen, the cash generated from the profits is enough to meet ongoing debt commitments.

In Summary

Don't fall into the trap of thinking budgets are theoretical fantasy lands. If you want to take your business and team to wonderful new heights, speak to Cliftons to assist you to get these done. Such an investment could literally mean better results by hundreds of thousands of dollars over a short period of time which means that you are reaching your targets to fund your desired level of lifestyle and in turn will make your business more valuable if ever you decide to sell.

Thanks to Pete Scolari of Scolari Comerford for the R&D