Have you ever heard of Parkinson’s Law? Do you wonder how that relates to cash flow? This is really weird, right? So Parkinson’s Law is that whatever you’re doing expands to the time that you’ve got to do it in.
Now, this relates to time, money, and toothpaste. Now, this is really random, bear with me. Just think back, you’ve got a tube of toothpaste, you’re going to brush your teeth, you get your toothbrush, and you put a big slab of toothbrush, your toothpaste of toothpaste on the brush, brush your teeth, when you spit out, there’s a big glob of toothpaste sitting in the bottom of your basin. Then that toothpaste tube gets smaller and smaller, to right to the end, you’re pushing it up and trying to get that last little piece of, of toothpaste on your brush. When you spit, there’s nothing left. Well, that’s called Parkinson’s Law. The you use decreases proportionally with the amount of toothpaste you have left.
It’s really the reverse of Parkinson’s Law, because you’re taking what you’ve got, and you’re squeezing every last bit of toothpaste that you can out of it. Guess what? This logict works with cash flow as well. If you’ve got a bank account, or a bucket of cash, and you’re going along willy nilly running your business, then chances are if you’ve got heaps of cash, you’re going to spend heaps of cash. Do you remember when you got your first job, you earnt like five bucks an hour and you worked at McDonald’s. That measly amount covered your spending for the whole week.
Now think about how much you earn and how much you spend on your daily coffee, which is more than what you earned at Maccas. The more money you have, the more money you spend.
So, using Parkinson’s Law, we can be a bit smart, we can harness human behavior and move that excess cash out of your main bank account. This means that when you’re going to look at what you’ve got to pay bills, you’re only looking at a reduced amount. You’re looking at that tube of toothpaste with the last little piece in it, and you’re going to make that last as long as you possibly can.
I’ve got a system that utilises this system for businesses, it’s called Profit First and if you want to know more about it, contact us ASAP so we can work out how cash time and toothpaste are related for you.
