"Don't Count Your Chickens..."

Cash Flow, Profit and the Third Kind

1.  Income – Outgo = Cash flow

2.  Revenue – Expenses = Profit

3.  Future Customer Revenue – Current Expenses (Mark-to-Market) = Destruction

“Mark-to-Market” is an unfamiliar term to the general public, but in laymen terms and in the business world, it basically equates to the accounting method Enron used to deceive its investors by reporting future revenue values of a customer against current expenses.

Wikipedia states “For one contract, in July 2000, Enron and Blockbuster Video signed a 20-year agreement to introduce on-demand entertainment to various U.S. cities by year-end. After several pilot projects, Enron recognized estimated profits of more than $110 million from the deal, even though analysts questioned the technical viability and market demand of the service. When the network failed to work, Blockbuster pulled out of the contract. Enron continued to recognize future profits, even though the deal resulted in a loss. (USA Today)” 

Even though ‘Mark-to-Market’ can be a questionable accounting practice by publicly traded companies if used in the wrong context I have seen many small and medium sized businesses deceive themselves with these same accounting practices. This accounting principal may not be on paper but it gives the business owner a false sense of their companies real value based on future revenues that may or may not come.

The way this deception works is a dentist, office supply company or pest control company (or whomever) wrongly anticipates the increasing value of a current customer one to two to five years from now.

These wrong customer values are derived from two sources:

First, the assumption their good or service will have a higher market price in the future (and therefore generate more revenue) than the present.

Secondly, the assumption that a customer at present will still be a customer in the future.

These assumptions have devastating effects when a business owner makes purchasing decisions (current expenses) on this supposed future customer revenue.

The Parable - don’t count your chickens before they hatch. Don’t spend money you don’t have.

Image credit: ToonPool.com

Who we are:

This blog is dedicated to help businesses increase productivity, decrease expenses and increase cash flow.

At ConnectionForce, we have created the very first online sales filter to allow you to pre-screen potential vendors before you agree to a meet with them.

Our goal is to totally eradicate Cold Calling as a sales technique within the next 5 years. (2015)

We are committed to making office managers and purchasers jobs easier by making sales people better. 

Learn more here

Marc Jacobs Handbags

What is the maximum for a woman? Another went wrong, and the bag. Is the Marc Jacobs bags! Is the Marc by Marc Jacobs Bags! Whether you know Marc Jacobs and Vice-card Marc by Marc Jacobs, I believe you will be a favorite bag of the woman. I specifically said that this brand of bag means: I think the Marc Jacobs Handbags and Marc by Marc Jacobs Handbags, no matter what side can do best. Do not believe me, you can look! Ha ha!

lancel

Les sacs en cuir se sent bien, un Lancel super look et même une bonne odeur en plus d'être durables.Le cuir est toujours le choix de mode parfait, intelligent et élégant et doux au toucher. http://www.venteprivee-lancel.com/
Qu'est-ce que les sacs à main en cuir est encore mieux est de toutes les tailles et de couleurs différentes vous serez donc en mesure d'acheter quelque chose qui convient à son style de sac Lancel BB et un goût parfait. Pour ajouter à la sensation de luxe que vous pouvez choisir l'un des sacs à main faits par de nombreux grands noms dans l'entreprise. Delight votre amoureux avec un sac d'une maison de design comme Chanel. Elle sera chatouillé rose de vente privee lancel posséder un de ces sacs grand nom. Les femmes comme les sacs à main qui sont assez grands et assez spacieux pour transporter tout ce dont ils ont besoin. Ils aiment les sacs à main qui sont fonctionnels, confortables à porter et look classique et décontracté. Maintenant il est facile de sac miss lancel trouver un sac qui fait tout dont vous avez besoin. Il est plus difficile de trouver celui qui a tous ces éléments et d'apparence soignée. Voici quelques qui ne sera probablement faire l'affaire. Sacs Hobo femmes ont-elles tout ce vente privée lancel 2011 recherchez. Ils sont assez simples pour être décontracté et assez élégant pour être élégant. Presque tous les fabricants de sacs à main font une sorte de sac hobo. Ainsi, il sera très facile d'en trouver un dans votre gamme de prix.

http://www.venteprivee-lancel.com/

replicawatches

Because they complement every outfit you wear, they have been deemed necessary in completing your replica Celine bags
We are so cheap Dolce & Gabbana hands are also available
Purses are one of the greatest Loewe handbags that can get a woman a diva
recently, the replica Gucci bags are getting much popular than those of the original and the main reason behind this is their cheap availability
Tank you for reading my article; I hope you would select your liking cheap Balenciaga bags
Dooney & Bourke handbags becomes a good alternative

Post new comment

  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong>
  • Lines and paragraphs break automatically.

Office managers and professionals...

If you are tired of unsolicited sales calls and want to do something about it then this is for you.

Salespeople and sales professionals...

Looking for a better way to connect with decision makers?  Check out our SalesPro package here.

Vendor Disincentives
I know, I know, vendors promise you the world… Actually most vendors are extremely accurate and competent at what they do.  Anyways, what do you do when a vendor promises you certain terms like lead times, project completion or...