Cash Flow and Change Blindness

Cash is the lifeblood of business.  That is why cash flow management and forecasting is so important to small business owners.  Change blindness is a psychological term.  It is a phenomenon in visual perception in which very large changes in full view of a visual scene are not noticed.

blind-leading-blindPerhaps you have seen the example of change blindness where 2 strangers are talking and a board disrupts the view between the strangers for a few seconds while another person replaces one of the strangers and the other stranger doesn’t notice the change.

One theory of why this happens is because of the way our brain processes visual information while having a relatively low short term visual capacity.  Because our brain has to process so much information it cannot detect every change that occurs.  Our brains encode what features we think are most relevant and discards the rest.

What can the small business owner learn from change blindness?

It means that small business owners need to focus on the features of their business that are most important and relevant.  Just like a picture, a business has many fine details and metrics.  A couple of the most relevant metrics are cash flow management and forecasting.  Businesses fail because they run out of money.  Other attributes can have a level of importance, but should not be a distraction from the focused view of cash flow management.

Be careful that you don’t put excessive focus on metrics like page visits, likes, followers, connections, posts, shares and retweets.  Be cautious that you don’t put imprudent focus on areas like busy-ness, adoption of the latest technology, facility expansion, service expansion, number of employees and even workplace fun.  These all have their place and level of importance, but they should not break your focus from cash flow management.

Contact us today for help in focused cash flow management and forecasting.