• Investment: The act of spending money to buy assets, hoping for future returns.

  • Real-world example: Think of it like planting a tree 🌳. You spend money and time (water, soil, and care) expecting it to grow and give fruits later.

• Types of investments

  • Bonds, stocks (like owning a piece of Apple or Google!)
  • Properties (like buying a house hoping its price will go up)

• Risks: All investments have risks, just like sometimes trees don't bear fruits because of unforeseen weather. The "weather" in business is the market condition.

• Relationship Connection

  • Businesses grow in stages. Just like our tree, it goes from a seed to a sapling to a full-grown tree.
  • When the owner puts money (capital) into the business, it can affect the profit and cash flow. However, sometimes things outside the business's control (like a sudden storm) can impact this.

Remember, a business can earn profits but still face cash problems. Like having a jar of cookies but unable to eat them! 🍪

• Reducing cash going out (like saving your pocket money)

  • Negotiate Delayed Payments: Ask suppliers for more time to pay.
    • Pros: More short-term cash.
    • Cons: Time-consuming and may harm future supplier relationships.
  • Delay Buying Big Stuff: Like machinery.
    • Pros: Save cash.
    • Cons: Old machinery may be inefficient.
  • Cut Some Costs: Such as advertising.
    • Pros: Save cash.
    • Cons: Fewer people know about your product.
  • Find Cheaper Suppliers: Like buying from a sale.
    • Pros: Less money spent.
    • Cons: Quality might not be as good.

• Improving cash coming in (like doing more chores for money)

  • Cash Payments Only: No credit allowed.
    • Pros: Instant money!
    • Cons: Some customers might leave.
  • Early Payment Discounts: Like a sale for quick payments.
    • Pros: Get money faster.
    • Cons: Less money than originally planned.
  • Diversify Products: Selling different items.
    • Pros: More products might mean more sales.
    • Cons: More costs and no guarantee of more sales.

• Finding more money (like searching for coins under the sofa)

  • Sell Unneeded Assets: Like selling old toys.
  • Bank Overdraft: Borrowing more than what's in the account.
    • Cons: High-interest rates.
  • Sale and Leaseback: Like selling your bike but then renting it to use.
    • Cons: Could be costly in the long run.