Thou Shalt Focus on Cash Flow
As opposed to what, you ask?
I’m Linda Feinholz. I work with Business Owners who want more Control, Value and Freedom in their business.
So, as opposed to what?
Let’s have the money conversation. Last September I found out that one of my clients, in business for over a decade, growing year over year, doing 7 million in revenue, managed her business entirely based on the amount of cash in the bank.
I would have been speechless, but for the fact that a huge percentage of small business owners do the exact same thing. They look at cash in the bank and not cash flow.
A company’s cash flow is calculated by subtracting its total expenses from its total income for a specific period. When you calculate your daily cash flow needs, you subtract daily expenses from daily income. If daily income is not enough to cover daily expenses, your business may have financial difficulty over time, or require to to constantly use personal funds to run it.
But that is only one angle of view for decision making.
IS your company truly generating enough cash to keep the doors open? Is that cash covering all of your fixed expenses – rent, utilities, licenses, employees… and also your variable expenses that rise and fall depending on how many clients and how much work there is to get accomplished?
Have you learned what a Balance Sheet or a Profit & Loss Statement is meant to show you? Do you budget and do forecasts and track variances?
Without understanding and using them you’re operating on only 10% of the daily information you need to run a business that’s predictable, in control and has any value in the eyes of bankers, brokers, investors or buyers. You’re running your company like an aerialist on a high wire.
OK – I know that sounds like jargon to a lot of people. But, this broader understand of the money side of your business one of the key shifts from operating a business as if you’re running it from your garage to a real, self-sustaining, thriving company.
What are the side effects of not tracking your cash flow and having disciplined financial management?
Well that same client was financing her daily operations with the use of 7 credit cards because she couldn’t get a bank loan.
She had no proof of revenues and expenses and how the business was managed so that her bank wasn’t going to lend her a dime.
If you had to be absent from your business, for any reason, for 90 days, what state would it be in On Day 91?
Managing off of cash in the bank would only keep things going for about 15-30 days. That’s a catastrophe waiting to happen – for your customers, your employees, your vendors… AND you.
I know, this topic is painfully dry! So I have 3 homework steps for you today:
First, go get a cup of coffee.
Next, call your accountant and set up time for them to walk you through the tools you should be using to manage your specific business.
Finally, implement using them on a weekly and monthly basis.
You need them to get your company in control, has measurable value, and can provide you with freedom.
I think too many business owners have had a hang up about money for way too long. It’s okay to make a difference, have great service, product great products. Is it going to be free? Of course not. Profitable? Hmmm, I sure hope so. But understanding money? Too many say “I’ll get around to that eventually” and I say that’s bullxxxx. We’re here to make a difference in the world, fine. We’re here to make a PROFIT. The two go hand-in-hand.
If you’re ready create a business that you’re not stuck in, you can learn more at OnDay91.com and book time to talk with me privately about what is going on in your business.
If you’d like to join other business owners in my online program you’ll find details at OnDay91.com/momentum and can decide if its a fit for you.
We’ll talk soon
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P.S. Whenever you’re ready… here are 4 ways we can help you stabilize and grow your business:
1. Grab a free copy of our Guide and Checklist
It’s the roadmap to creating a stable, scalable, valuable business that is so healthy you could be absent for ninety days and it would continue to thrive. — Click Here
2. Join the On Day 91 group and connect with business owners who are resetting and scaling too
It’s our new Facebook community where smart business owners learn to get more control of their business, value for their company, and freedom in how they use their time. — Click Here
3. Join our Momentum Program and be a Case Study
We’re putting together a new case study group at On Day 91 this month… stay tuned for details. If you’d like to work with Linda on your business-pivoting and growth plans… just send her a message with the words “Case Study”. — Click Here
4. Work with Linda and her team privately
If you’d like to work directly with Linda and the On Day 91 team to take you and your business to it’s next level… just send Linda a message and with the word “Private”… tell her a little about your business and what you’d like to work on together, and we’ll get you all the details! — Click Here
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