Is Cashflow Killing You?

So, is cash flow killing your business? Many people band this word ‘Cashflow’ around often saying “my cashflow is tight this month.” The question is, are you really measuring cashflow?

98% of businesses aren’t measuring their cashflow properly, because in order to have a true reflection, you need to have a live feed from sales, from your profit and loss and be aware of your balance sheet (particularly the creditors and debtors).

A lot of us in business would love to be able to see the future and yet we can’t, or we choose not to, because we haven’t educated ourselves enough to. Most business owners, are literally looking in the rear view mirror all the time.

So many business owners also wait until the end of the year for their accountant to give them their numbers, and if you’re a small business, you’re probably in that camp! So, t’s too late then, the numbers are the pulse of our business, and if we’re not checking in on the pulse of regularly we are blindly moving forward, and we’re not able to make the right decisions.

So, what does this mean? So, cashflow is one of the biggest issues for SMEs, but the biggest issue is that people aren’t measuring it right. So finance and sales need to come hand in hand. They need to be two functions which come together, in order for us to look ahead. This allows us to see if there is a problem coming.

Now what does that mean? For those people who are growing a little bit, you’ve got sales people; you’ve got channels in place. You’ve got to have a live feed come from the channel, i.e. what sales are due when OK, you’ve got a new piece of business coming up here, what’s the certainty, what’s the contracted business moving forward, what’s the guesses that you’ve got coming into your pipeline in the next one, two, three, four months?

The further into the future you can see the better. If you can’t see three months out, you are gambling with your business right now, and this is not a once a year exercise, this is a once a week or day exercise, depending on how tight your cash flow is right now. Because your cash flow changes in a heartbeat, an email comes in and that project gets delayed by a few months. Your cash flow’s just been smashed by two months.

You just met someone from a cup of coffee and it’s just landed into a great deal. That is every single telephone call, email, every sales conversation, your sales pipeline is changing in a heartbeat. And just most people are trying to manage it in their heads, which is impossible and it will just freak you out.

Contrary to popular opinion out there, most problems happen in businesses when you are doing well! Because what happens is you really hustle, hustle, hustle and then you get business in. Now you’re working and you get so busy delivering on the business you’ve got because your capacity is maxed, you actually take your eye of the sales pipeline, you stop selling, because you’re busy delivering. And then there’s only a question of time until you finish delivering and then oops, there’s no sales at the back end again. And that’s where a lot of people say, oh my God Deri I’m having a bad month and I say, no you’re not, you had a bad month four months ago, you just didn’t see it coming and you didn’t do the activity back then in order to impact you now. Because most of you out there, and every industry cycle’s different, every sales cycle’s different, but most of you will have a three to six month sales cycle, i.e. the work you do now will benefit you in three to six months time, and if you ever take your foot off the pedal of that, you are going to impact your business in the future. So you need to get this sales pipeline thing together. This is critical.

But this is only one component of cashflow. The others are, understanding how the profit and loss feeds into that in a live capacity and also the impacts of the balance sheet and how the balance sheet brings into this. Now I know this is usually boring stuff, it’s not, it’s critical. One of the ladies on our recent Strategy Retreat, told us that numbers made her sick, and by the time she left, she said I get it now; it’s a story, this is really exciting, this is my business. So please just get to know your numbers, because you don’t need to be having those bad months that you were having. You don’t need to have the stress around cashflow, which is mythical for you.

So we’ve put together a webinar to explain those cash components for you, and show you how you can really start to understand cashflow & look into the future.  I can spot a problem coming three to six months out, which means we can do something about it now and it will reduce your stress in business massively, because one of the biggest stresses is cashflow.

So come and join us on our cash webinar. I’m going to take this in a whole level of detail more, and I hopefully serve you in the business, to get you seeing into the future and making the decisions, the right decisions, based off intelligence right now.

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