Business Enterprise vs An Investment Asset

Think of your business enterprise as having a bathtub (that’s your organization) and you are trying to fill it up with warm water to bathe in it (to enjoy the net revenue).

You must do it within budget (expenses are like holes in the bathtub that cause the water to seep through) and you must also get it all done in a timely fashion, otherwise, the warm water will cool off (the market will change) and you will be left with nothing.

If the tub has big holes, (your company has a lot of expenses), you will not only pay more for the water but it will take you more time to fill it up.

You are not only expending the effort to get enough water volume in the tub, but you are also trying to do it as fast as possible, so you can have time to sit in the warm water and enjoy it before it drips out or cools off.

So the amount of work and volume of effort we expel to bring in income (Just like the work one does to fill up the tub), is only valuable in relation to the amount of expenses (leaks) that could be reduced or stopped (plugged) as fast as possible

The goal is to get the maximum income into the organization while spending the least amount of expenses, all while keeping a watchful eye on the clock because the game will change (just like the water temperature)

I want us to get enough income into the enterprise (warm water into the tub) fast enough to enjoy it, before the temperature (market) changes and before the expenses (leaks) cause us to work even harder and faster just to keep up the pace.

This can happen successfully is we:

1) Increase income

2) Reduce expenses

3) Do it fast

In the business world, timelines are even more important than budgets.

In the investing world, however, the assets are like the tubs. Each asset (tub) has some warm water (revenue) trickling in, while some associated expenses are expected (leaks that cause some water to drain out).

But if more income is coming in than going out (more water is trickling in, then seeping out) we have positive cash flow.

Usually, with a good investment, such as a commercial building in a great location with a strong Tenant, and a good lease, you are in a good situation because you already have an asset that performs (Already in a tub with some warm water). The positive cash flow (Steady continued warm water flowing in) is offset slightly by low expenses (small leaks).

If you just watch keep your eye on the asset (the tub) and constantly react to any increase of outflow of expenses (leaks getting bigger) vs. the inflow of income (warm water coming into the tub), you will do fine over a very long period of time.

The end goal is to have great assets producing reliable and growing cash flow.

This is hard to accomplish in a business enterprise without too much effort, time and money but much easier to achieve with a few good investment products like commercial real estate assets.

I do business to increase my portfolio of investment assets and not to grow the business but to grow the assets.

And if you must be in any business then be in the business of investing.

Sincerely,

Cherif Medawar

www.eFreedom2013.com