THE MVET WAY CEMN NEWSLETTER_APR_MAY_JUNE_2017

What Is Money? By Brian Perkins, M.B.A.

Part 2

By Brian Perkins, MBA

After reading this article, things that you think you know are going to turn out to be false; things you might think are trivial will turn out to be of great im- portance. It is part of what makes cash and money fascinating. The National Federation of Independent Business (NFIB) conducted a poll and found that two-thirds of small businesses experience money prob- lems. Businesses do not have enough money, or if they have money, they cannot get to it when it is need- ed. Well, that is a huge problem especially for compa- nies that are undercapitalized. Companies could over- come this dilemma by understanding the meaning of money. Money is a form of information . What makes money “ money,” is the belief users have about the in- formation contained in the money. Money is a medi- um of exchange, store of value, and a measure of wealth. Until a small business understands the belief about the information contained in money, they will never sustain profitability and will eventually go out of business. Stay tuned for Part III, as I uncover the different forms associated with money.

Part I of this article, I covered the misconception of money and how it is a by-product of undercapitaliza- tion. Now in Part II, I will dive into the true essence of the meaning of money. So this leads to my question, “What is money, and why is it important?” I am sure certainly you have thought about money. It is rare a small business does not think about money – making money, investing money, spending money, or having enough money. In fact, money can seem so important to businesses that sometimes people make the error of believing that money is all that business is. Terms that relate to money could be cash, cash equivalents, profits, and banking to name a few. Have you given any consideration to what these terms mean? How are the alike? How are they different? How are they relat- ed to each other? The differences are important be- cause in the end money in its different forms repre- sents the lifeblood of the business, and knowing which forms to use, and when to use it, can make the differ- ence between boom and bankruptcy.