General Fund Allocation Strategies

Every decision founders make around capital matters. Here's some insights on managing capital. Always be mindful about your capital. Taking in capital incrementally, and knowing exactly where it’s going and why, ensures that how you manage your capital early doesn't get in the way of success down the line. Understanding Capital Management: Capital encompasses not just financial resources, but also the strategic allocation of those resources to drive sustainable growth. Mismanaging capital can lead to liquidity issues, missed opportunities, and even business failure. Incremental Capital Infusion: 1. Gradual Investment: Taking in capital incrementally allows more controlled and strategic decision-making. This approach lets you test the waters with smaller amounts, evaluate their impact, and adjust your strategy as needed. It reduces the risk associated with large, upfront investments that may not yield immediate returns. 2. Building Relationships: Incremental investment encourages stronger relationships with investors. By bringing them along gradually, you can communicate your progress, act on feedback, and align investor expectations with your business strategy. Knowing Where Capital Goes 1. Purposeful Allocation: Every dollar spent should have a clear purpose. Whether it’s funding a new project, expanding operations, or investing in technology, knowing the intended outcome is important to good management. Allocation alignment ensures that capital directly supports your strategic goals. 2. Continuous Monitoring: Implement systems to track capital allocations performance. Regularly review financial reports and KPIs to assess whether your investments yield expected results. Oversight enables timely adjustments. The Future Implications of Present Decisions 1. Long-term Vision: Capital decisions should align with your long-term vision. Consider how investments you make today will affect your company’s future. Short-term gains can compromise long-term stability, it’s essential to balance immediate needs with future objectives. 2. Building Resilience: Strategically managing capital can builds your business’s resilience. Having a clear understanding of your capital structure allows better contingency planning and provides a buffer in times of economic uncertainty. Being mindful of your capital isn't just about managing money; it's about making informed, strategic decisions that influence your business’s present and future. By approaching capital incrementally and with purpose, and understanding the implications of your choices, you can position your business for sustained success. Every financial decision counts—ensuring that each one is deliberate and well thought out paves the way for future growth and stability. #Business #Finance #WorkingCapital

Cash Bucketing Strategy - spread your money out over different accounts for different needs. Each bucket has its own liquidity profile, time horizon, allocation mix, and tax considerations. This is especially useful for solopreneurs & small business owners who have irregular and uneven cashflow. 1. Emergency bucket - high yield savings account at 4-5%. Super liquid. Can access cash in 0-3 days. 2. Short term bucket - t-bills, short duration bond funds, CD's. You can earn 4-5% in these accounts right now. Money is typically locked up for 3-12 months. 3. Medium term bucket - money needed for things in 1-5 years like expanding the business, buying equipment, hiring employees, investing in new products, etc. This will be a mix of stocks & bonds depending on timeline and risk tolerance. 4. Investment account bucket - this is a long term bucket to grow wealth. We use dollar cost averaging to invest in ETFs and Index-funds, and use a buy-and-hold strategy. 5. Health & education bucket - 529 college accounts and health savings accounts have tremendous tax benefits. We use these for large and specific needs, 15-30 years into the future. 6. Retirement bucket - maximize retirement flexibility by investing in different kinds of accounts depending on your situation. Traditional, Roth, 401k, and IRA, are all considered when planning for retirement. If you would like to learn more about how a Cash Bucketing Strategy can help you, send me a DM.

This financial strategy saved me thousands. And it can do the same for you. As a business coach working with CEOs, founders, and business owners, I’ve seen one common mistake: They focus on revenue… but ignore cash flow. I did the same. Until I learned this strategy: Cash Flow Allocation. Here’s how it works: 1. Pay Yourself First Sounds counterintuitive, right? But setting aside a fixed percentage of income for yourself creates discipline. It ensures you’re not just building a business but also building wealth. 2. Allocate for Growth I dedicated a portion to reinvest in my business. Not on fancy tools but on systems that drive efficiency and scale. Think automation, marketing funnels, and team training. 3. Emergency Fund Every business faces downturns. I created a 6-month emergency fund. This safety net gave me the confidence to take calculated risks… Without the fear of losing everything. 4. Debt Reduction High-interest debt is a silent profit killer. I used this strategy to eliminate debts faster. Freeing up cash for growth and security. 5. Reinvest Wisely Not every dollar needs to be spent. I reinvested in assets that appreciated over time. Think real estate, stocks, or even upskilling. The result? I saved thousands, scaled my business, and created financial security. This strategy isn’t just about saving money. It’s about building a business that funds your life goals. Want to implement this in your business? Let’s chat in the comment.

Budgeting is dead. Capital allocation is the future. Most finance teams are still budgeting like it’s 2005: Last year’s numbers plus 5%. Every department gets a slice. We debate over line items no one remembers by Q2. But here’s the truth: You don’t grow a business by budgeting. You grow it by allocating capital. The best CFOs don’t think in cost centers—they think in investment portfolios. They don’t ask: “How much should we spend on marketing?” They ask: “If we put another $500K into marketing, what do we expect in return? And is that a better use of capital than product or headcount?” Here’s how to shift your mindset: 1️⃣ Start from ROI, not last year’s spend Every dollar should fight for its life. If it doesn’t generate value, cut it. 2️⃣ Kill “evenly distributed” budgets Not every department deserves more. Cut what doesn’t work. Double down on what does. 3️⃣ Turn your finance team into capital allocators Train them to evaluate investments, not just track expenses. Teach them to ask: What’s the return on this project? What’s the payback? What are the risks? The future of finance isn’t about tracking the budget. It’s about owning the company’s financial strategy. Because in the end, capital allocation IS strategy. 💬 How many times a year do you reforecast? #CFO #FPandA #StrategicFinance #CapitalAllocation #FinanceLeadership #BusinessGrowth #CFOInsights