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Core Working Capital: Why It Matters
Description
“If you’re not paying attention to core working capital, it’s like waking up one day and all of a sudden you’re in the middle of a shit storm. And you’re like, “How did this happen?!” – RJon Robins, author of Profit First for Lawyers
In the final episode of our seven-part Financial Literacy Series, RJon introduces one of the most important concepts for long-term business stability: core working capital. Drawing from both the Profit First for Lawyers audiobook and the 2019 live workshop, he explains why maintaining adequate working capital isn’t about fear. It’s about creating the financial cushion that allows you to grow intentionally instead of constantly reacting to cash flow challenges.
Throughout this series, we have talked about understanding your numbers, calculating Total Owner Benefit, determining your normalized salary, implementing Profit First, and strategically getting out of production. Core working capital brings all those lessons together.
What Financial Literacy Adds to Your Life
Our exploration into what it means to become financially literate as a law firm owner has been about understanding the story your numbers are telling you. This knowledge can help you make better decisions for your business, your family, and your future.
Action Steps
- Review your firm’s monthly operating expenses and determine how much core working capital you currently have available.
- Meet with your leadership and financial team to discuss your growth goals and whether your current financial cushion supports those plans.
- Use what you’ve learned throughout this Financial Literacy Series to make intentional, well-informed decisions that strengthen your business for the long term.
While financial literacy does not eliminate uncertainty, it does give you the confidence to make informed decisions about your business growth. As RJon has explained throughout the series, the goal isn’t to simply accumulate cash. It is to build a business that gives you more options, greater stability, and the freedom to think beyond today’s challenges.
Mentioned
- Parts 1-6 of the Financial Literacy Series
- Part 1: You’re Not Bad With Numbers
- Part 2: Understanding the Stages of a Law Firm’s Growth
- Part 3: Calculating Your Total Owner Benefit
- Part 4: What Is Your Normalized Salary?
- Part 5: How Profit First Actually Works
- Part 6: Getting Out of Production
- Chapter 9: Total Owner Benefits: Core Working Capital
- Speak with How To Ma