I picked up a book the other day that sounded intriguing- The Knack- How Street-Smart Entrepreneurs Learn to Handle Whatever Comes Up, by Norm Brodsky and Bo Burlingham.  The authors both work for Inc. magazine, and Norm writes their Street Smarts column.  Norm also happens to have degrees in both law and accounting, so I am probably pre-disposed as a fellow member of the bar to take what he has to say seriously (professional courtesy.)

I started reading last night, and I’m having a tough time putting the book down.  It talks about business basics in a very direct, non-professorial way, so that everyone trying to find their way in this roller-coaster economy should find it a good read.  More important, it highlights the things that get new businesses into trouble-  such as not understanding cash flow and margins.  He covers everything from being the boss to how to deal with growth, and this is something so many people need as a touchstone for their own business efforts, whether its on their own or for an employer.

Business confuses people because they get caught up in sales = cash, but never fail to account for the cost incurred in making that sale, or the cost of tying to collect once the sale is made.  A sale is a promise- the difficulty always comes in the execution.  If you make a sale, you have to deliver as required, which is not always as easy as it looked up front- you may have to get supplies from others, or perhaps spend time and money up front for travel and preparation- and that is a cash outlay, up front.  You then depend on the other person executing their promise to pay you right away, but sometimes they don’t write the check for months.  They are waiting on their creditors to pay them, so they can pay you….giving you some perspective on why the credit crunch has a ripple effect across the economy.  If people aren’t paying you, you can’t pay your bills, and without cash, you are out of business.

I’ve written about all of this stuff before, but Norm Brodsky and Bo Burlingham put it all together in one book  that every consultant, entrepreneur, or anyone with any business ideas or illusions should pick up and read before you quit that day job.  If you don’t enter into the business with your eyes wide open and adequately prepared, you may end up out of business, not because your business isn’t viable, but because the cash flow crunch sinks you before you’ve had a chance to swim.

Gotta check this one out right away.