“Finance is the art and science of watching money flowing into and out of a business, then deciding how to allocate it and determining whether or not what you’re doing is producing the results you want. It’s really not any more complicated than that.” (151)

“The very best businesses create a virtuous cycle: they create huge amounts of value while keeping their expenses consistently low, so they make more than enough money to keep going without capturing too much value.” (152)

An under-appreciated benefit of profits is the fact that they can act as a “cushion” against an unexpected rise in expenses.

There are only four ways to increase your business’s revenue:

    1. Increase the number of customers you serve
    2. Increase the average size of each transaction by selling more
    3. Increase the frequency of transactions per customer
    4. Raise your prices

The purpose of a customer is not to get a sale. The purpose of a sale is to get a customer.
-Bill Glazer, advertising expert

 
“Lifetime value is the total value of a customer’s business over the lifetime of their relationship with the company.” (160)

“Allowable Acquisition Cost (AAC) is the marketing component of Lifetime Value. The higher the average customer’s Lifetime Value, the more you can spend to attract a new customer, making it possible to spread the word about your offer in new ways.” (161)

“Keeping a running tally of how much you spend and how much revenue you collect from the start of your business’s operations is the only way to figure out whether or not you’ve actually made money.” (166)

“Purchasing power is the sum total of all liquid assets a business has at its disposal. That includes your cash, credit, and any outside financing that’s available.” (168)

“Because debt keeps money in your account, it maintains your purchasing power.”

“Compounding is the accumulation of gains over time. Whenever you’re able to reinvest gains, your investment will build upon itself exponentially – a positive feedback loop.” (174)

“If you reinvest the revenue your business generates and your business is growing rapidly, you can multiply your original investment many times over. Compounding is the secret that explains how small companies that reinvest their profits become large companies in a few short years.”