029 The Cash Flow Skunk v Puffer Fish Theory

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The Entrepreneur's Money Podcast - Smart Money Management For Small Business «
029 The Cash Flow Skunk v Puffer Fish Theory

11y ago 12:19

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It’s the nature of entrepreneurship to have the tide of your income ebb and flow over time. That’s why no matter how successful your business, most entrepreneurs will find themselves with a cash flow problem at some point along the way. So when you have more bills than you do income, how do you prioritize your payments?

You label them as skunks or puffer fish, of course! The operating principle behind this theory is, “He who squawks the loudest has the smallest bite.” Think about it—in times of crisis a puffer fish will blow up into an imposing, spiny threat but has little action to show for its ferocity, while a skunk will make very little fuss until its stench hits you square in the face. The puffer fish makes a lot of noise up front because it doesn’t have a lot to back up its threat. It warns people at the beginning to avoid conflict all together.

So think of your creditors like puffer fish; they’re all talk and little action. They show their spikes and call repeatedly to distract you from the fact that they have little to back up their threats. Skunks on the other hand (like your first mortgage, for example) know they don’t need to harass you. They’ll just foreclose on your house instead…that makes a big enough stink.

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