Admit it – you were a Monopoly junkie when you were a kid. All those properties to buy, all those houses and hotels to build…and all that money to play around with. Who wouldn’t be enamored of a game that lets you get rich quick, over and over again?
But many of us who ended up in careers related to finance had a special relationship to the game – it’s where we became addicted to the excitement of handling business finances, and the thrill of winning with a well-planned and perfectly executed strategy.
It’s also where many of us first honed our skills with finance. Don’t believe me? Then just take a look at these 3 lessons that Monopoly teaches us about budgeting and forecasting.
1. A game plan is essential.
You know you did this at some point or other – letting loose during a game and buying every single property you landed on, without any kind of strategy or game plan whatsoever. But what was the result? Unless you were exceptionally lucky, you probably ran out of money pretty darn quickly, and ended up having to mortgage all those properties.
If you learned your lesson well, then you tried to go into every ensuing game with some sort of strategy – maybe it was to buy a lot of cheap properties, or maybe it was to focus on the more expensive ones; whatever the plan, at least you had one, and that was important training for real-world finance, as well.
Today you understand that the key to success in business is to lay out a detailed, strategic budget and financial forecast for the future. Without one of these plans in place, you run the risk of spending all your money on nonessential expenses, and running out without accomplishing your goals.
2. Don’t forget about cash flow.
It’s nice to have a bunch of properties, but if all your money is tied up in real estate, you won’t have the cash to buy your way out of jail, should the need arise. On the other hand, having built-up properties that earn you money every time someone lands on them is a much larger source of cash than simply passing Go every so often. Cash flow determines who wins in Monopoly – and in real-world business, too.
Without sufficient liquid assets, your business is not only handicapped in its day-to-day operations, it won’t be prepared in case of an unforeseen event that requires a quick outlay of cash, and it won’t be primed to take advantage of any unexpected opportunities that might pop up, either. Planning for adequate cash flow is vital in any business budget.
3. Pay attention to cost.
Having emphasized the importance of cash flow, it’s also vital to pay close attention to cost. Yes, Park Place gets you more cash – but it’s also more expensive to buy and maintain. Spending too much without considering the cost vs. how much you stand to gain is the downfall of many a Monopoly player.
In the same way, cost must be a consideration in business budgets, as well. Is that major purchase really worth it? Will that investment pay off? Or will you end up earning more with a less expensive investment, once every factor has been looked at?
The key to success with business finances, just as in Monopoly, is to create and stick to a strategy that keeps in mind both costs and cash flow. And our business budgeting and forecasting software, True Sky, helps you do just that. By utilizing True Sky to its fullest, you can plan for financial success for your business – and win every single game you play. Contact us today to learn more.