There’s a saying that goes something like this… “Show me a person’s checkbook and calendar and I will show you what that person values.” Today, we’d need to adjust that saying for the era of electronic banking. Or… we would simply need to recognize the simplest of truths. How you spend your money and time reflect what you value most.

The value systems in a family business run deep. So deeply that they’re often referred to as core beliefs and they serve as the foundation of decisions and choices both individually and organizationally among owners and leaders.

The Commonality of Core Beliefs

Among the core beliefs that make-up the value system within a family business, there is one in particular that stands out for me as being essential to long-term success. Like many sayings offering timeless wisdom this core belief is simple, can be applied by everyone and is mastered by a few. This is the core value of dry powder and debt.

Dry Powder and Debt

In business, the term dry powder refers to cash and is the fuel for growth. Debt is a ratio to be managed correctly in relationship to that cash. Translated as a core belief of family business, the premise is simple. Don’t let a bank dictate your decisions. Manage your cash (dry powder) so that you can fund your future growth and opportunity. The leadership, relationship and ratio between the two is about one simple concept…CHOICE.

Owner’s Choice

When faced with the decision, the owners of family business prefer to control what they can control. This is what we refer to as the owner’s choice. This is the specific reason that keeping cash reserves high and debt low in relationship is a core belief of so many owners of family businesses. They recognize the long view requirement of smart financial decisions and their impact on advancing or restricting the opportunity for growth within their business.

Imagine the opportunity to grow the business exponentially based on a strategic choice. Now imagine the frustration of a business owner that is so leveraged with debt that they’re unable to pursue the very opportunity that would have accelerated their business to the next level. Conversely, imagine the options for the owner who has lived by the core belief of maintaining high levels of dry powder and low levels of debt.

In a word, it’s all about CHOICE.

The Value of Simplicity

On a personal level, I’m grateful that my parents instilled the simple, yet profound, core belief of financial competence in my life at a very early age. There are three things that my parents said over and over again to bring practicality to financial knowledge. These are the same things they tell their grandchildren today to instill a core belief across generations. The great part about something that’s simple is that it often times requires no more explanation. Such is the case with the timeless and simple wisdom of a school teacher/administrator and business owner.

  1. Spend less than you make
  2. Don’t live beyond your means
  3. Save and invest something from every paycheck and you’ll be the one signing the paychecks

Thoughtstarter: Control What You Can Control

If you’re interested in increasing your financial knowledge let me encourage you to check out a couple of resources that you may find useful, starting with a guy by the name of Dave Ramsey.

If you don’t know who Dave Ramsey is, you may want to invest the time to learn about him. 30 years ago, Ramsey filed for bankruptcy. Today, he’s considered “America’s trusted voice on money.”  He’s the owner of Ramsey Solutions, the voice of The Dave Ramsey Show, a New York Times Best Selling Author… and he has an estimated net worth of about $55 million.

One of my favorite quotes from Dave, of which there are many, is “You must gain control over your money or the lack of it will forever control you.” Think about that as it relates to your core beliefs, choice and the value of simplicity.

Two books that are required reading for people I care about and who care about being able to make their own financial choices and define their financial future are:

  1. The Millionaire Next Door
  2. Everyday Millionaires

Here’s to the core beliefs of family business that are the foundations of decision and choice.

Be authentic. Be purposeful. Make it meaningful.
Brent

P.S. I want to hear your thoughts – please share them in the comments.

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