“Do or do not, there is no try.”
Harsh but meaningful, the words of the famous Jedi master – Yoda.
In today’s business world, capital is expensive, making profitability and sustainability just as important as growth. Financial discipline should be a guiding principle for businesses to succeed in the long run.
This is where the 900 year old Jedi Master from the time of the Galactic Republic becomes relevant.
Businesses with a strong understanding of their finances are better equipped to achieve their goals and handle unexpected challenges. Without financial planning and discipline, overspending and unclear financial decision-making can occur.
By creating and following a financial plan, businesses can use their resources efficiently, avoid overspending, and make informed decisions.
Let’s explore what Yoda can teach us about managing business finances.
Lesson 1: Use the Force to keep your spending in check
In Star Wars: Episode V – The Empire Strikes Back when Luke Skywalker first arrived on Dagobah, we are introduced to the Jedi Master living in a small, simple hut, with few possessions. Yoda was content with his meagre lifestyle, and it demonstrated his frugality and ability to live a simple life.
While businesses need not alway be as frugal as Yoda, given today’s economic environment, it is important that businesses must be mindful of their spending to avoid overspending and cash flow issues.
Adopting a budgeting strategy is an effective way to control spending. It helps businesses allocate resources efficiently and reduce unnecessary expenses. By tracking expenses and creating a budget, businesses can ensure that they are not overspending on non-essential items and are investing in areas that provide the most significant return on investment.
Lesson 2: Keep your financial records organised as the Death Star plans
While Yoda may have been really good at keeping mental notes of all his super specialised Jedi training, for mere mortals and growing businesses mental notes aren’t as effective.
Businesses must keep accurate financial records to stay financially disciplined. By recording all transactions, businesses can monitor their financial performance and make informed decisions. Good financial records also make it easier to track expenses, prepare tax returns, and comply with regulatory requirements.
Lesson 3: Master the mind trick of financial focus
There’s not a better master-protege duo like the calm Yoda and the eager Skywalker! Yoda was committed to helping Luke develop his skills and abilities to become a powerful Jedi, even when Luke doubted himself and faced many challenges, remaining focused on his goal with hawk-eye focus.
Similarly, businesses must maintain their focus on financial objectives to achieve success. Financial objectives could include increasing revenue, reducing costs, or improving profitability. By setting clear financial objectives, businesses can measure their performance, identify areas that require improvement, and make informed decisions.
Lesson 4: Keep separate, business and personal finances, you must
The fine line between what’s business and what’s personal is something that Yoda differentiates quite well. Even when he learned of the betrayal of Jedi Knight Anakin Skywalker and his transformation into Darth Vader, Yoda put aside his personal feelings and biases to make decisions that were in the best interest of the Jedi Order and the greater good.
While businesses need to not always come across such heart wrenching decisions to make, it is important to differentiate between personal and business expenses. All expenses related to the business should be charged to the company account, while personal expenses should be charged to the individual’s personal account. This is important for a variety of reasons.
Firstly, it makes it easier to track and monitor expenses, which is necessary for accurate financial reporting. Secondly, it helps business owners to see the true financial health of their business and make informed decisions based on this information.
Additionally, mixing personal and business expenses can negatively impact a business’s credit score, making it more difficult to secure loans or lines of credit in the future.
And when access to cash is running low, it’s better to always opt for credit lines, such as Razorpay Line of Credit, to handle the situation as opposed to using your personal savings for business expenses.
To sum up….
“Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.” Along the lines of Yoda’s wise words, lack of financial discipline can lead to overspending, poor financial decisions, and ultimately, business failure.
By being more disciplined when it comes to managing and monitoring your businesses finances, it’s a lot easier to make informed decisions, avoid overspending, and ensure long-term sustainability.
So, remember, “Do or do not, there is no try.”