Money makes the world go round is a popular saying we all heard before. It was first used in a musical play cabaret in the 1960’s. Even today money makes the world go round at an ever increasing pace. I am in Sweden were Prof. Niclas Hellman from the Stockholm School of Economics, founded in 1909 and therefore one of the oldest business schools in Europe, is explaining how to read a balance sheet of a company. He is doing a great job, even me being a non financial start to understand which methods can be used for reporting statements of cashflows, depreciation methods for fixed assets and so on. More important, I learn to understand what all these financial numbers can tell us about a company.
PROFIT AND LOSS
Profit and loss are the driving force and motivates much of management decisions. Businesses must earn money for their survival or to fulfill their need for growth and keep their shareholders satisfied. Money can facilitate progress, in most cases, a business or person who has more money is considered more successful and recognized by others. It motivates much of human activity.
Money itself is not evil, but the love of money is called the root of all evil. All too often shareholder value takes over and management become obsessed with acquiring money by any means, not recognizing social, environmental or economic impacts. Regularly we read about layoffs usually because of high costs, pollution and environmental damage or increased payment terms resulting in small business having financial problems.
For businesses as well as people, money affects everything. Could you imagine a society where no money exists? Will this bring more happiness? Many people worldwide believe it is love and not money that makes them happy. However most of us work to earn money for the desire to enjoy life participating in favorite activities. These can be quite costly and request for having a job and making money. People and businesses make decisions what they can and can’t do based on their incomes and revenues.
FINANCIAL VALUE CREATION
So despite of opinion that money is the reason for conflicts, it also offers opportunities to enjoy our lives and craft new inventions. Still the economic bases of prosperity for all us is in danger and the gap between rich and poor is widening. We cannot survive continuing the current financial model in the long run. It is time to be challenged and create a fund enabling a financial value creation process for all of us. One which focusses on growth while investing in social responsibility.
It is no secret that many people all over the world find it hard to make ends meet. To ease the situation for many of these people, the fortunate of us could offer interest free loans, providing borrowers with financial breathing room and dignity or assisting small business to secure self sufficiency. The beauty of establishing an interest free loan is how it multi tasks and renews itself. Loans are distributed, repaid back to the fund and loaned out to others.
If we really feel that money makes the world go round, lets do in such away it makes a positive contribution. As Warren Buffett, one of the richest people on this planet once said: “If you are in the luckiest one per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”