Cash Flow, Communication & the biggest mistake you can make right now

Over the last two weeks I’ve been hosting what I’ve termed an Online Group Peer Resource Centre. Once a week I meet virtually with a group of small business owners who are looking for insight that will help them navigate these uncertain times, as well as to share stories from their own businesses and lives in the hopes of helping others. So far we’ve discussed topics such as how to leverage government funding and assistance programs, how to understand, experience, and resolve the vast amount of emotions we’re all feeling right now, and most recently four areas that you NEED to focus on right now to give your business the best chance at enduring this crisis.

As small business owners and entrepreneurs, you made the choice long ago to “give’er”, colloquially speaking. That means that you’re inherently prepared to weather this storm and come out the other side intact; there is no “give up” or “give in”. So what does weathering the storm look like? What do you need to focus on and when in order to survive? We’ve all heard various differing accounts of what a “return to normal” will look like, but it seems apparent from multiple experts that we can likely expect this “new normal” to develop over the course of one to two years. What does this mean for businesses like yours? It means it’s time to understand and acknowledge where you are right now, communicate with others consistently, think outside the box, and plan to move forward. Two things are clear: the best thing you can do right now is to get a handle on your cash flow and the worst thing you can do right now is to freeze like a deer in the headlights.

Cash Flow: Understand, Analyze, and Forecast

You never think about oxygen until you don’t have enough. In business, cash is our oxygen. While not all business owners have the luxury of a well padded bank account at all times, one thing’s for sure no matter how much you have in the bank and that is that as a business owner right now cash is top of mind. So how do you manage your cash flow in a way that allows you to predict and plan for where you might start to run into trouble? If you aren’t already utilizing some form of cash flow analysis tools then you need to start and you need to start now. It doesn’t have to be complicated, you just need to understand how much is coming in, how much is going out, and when.

First, record your weekly incoming revenue that you can reasonably expect to receive over the next 13 weeks. Use your current accounts receivables, thinking about when each customer is going to pay you based on historical data and any conversations you’ve been having with them. Next, expected expenses. Make a list of every dollar that will go out and record it in the week that it will leave your account including payroll, rent, utilities, software, etc. Now that you have 13 weeks of expected revenue and expenses recorded, start with your week one opening balance and add/subtract accordingly to project your cash flow for the full 13 weeks. From there you’ll be able to see at what point you start to dip into your line of credit, your savings, or anywhere into the dreaded red. Register for the Online Group Peer Resource Centre to get access to this week’s replay video as well as a pre-formatted 13-week cash flow analysis spreadsheet that you can use for your own business.

Now, use this information to PLAN for successful cash flow management. Think of paying slower, collecting faster, and selling more. We’ll get into how to sell more in future weeks (on April 22 we’ll be discussing how to pivot your business), but you should have an initial idea of what expenses you can slow pay if needed and how you can put the pressure on your customers to clear up their outstanding balances. So, pay your necessities first, then prioritize and schedule the rest after. Get out there and be a squeaky wheel when it comes to accounts receivable. Don’t accept “the cheque is in the mail” as an answer. You don’t need to be inhumane, but you need to advocate for your business and be real with people about the importance of staying on top of their payments. Your best chance at clearing up outstanding balances is right now, not a month from now when more businesses and people are in the thick of a cash crunch. Check out this excerpt from the book “Tiger By The Tail – 99 Secrets to Tame and Master Your Business” for some tips on how to collect on accounts receivable.

The moral of the cash flow story is that you need to understand where you are and what’s coming your way. What you can see coming you can plan for, and what you can plan for you can, in most cases, endure.

Communication, Journaling, and The Biggest Mistake You Can Make

Cash flow is the number one priority, but it’s not the one and only. Three additional things to focus on right now are clear and consistent communication, keeping a log of actions you’re taking and lessons you’re learning, and making sure that you just keep moving.

Communicating with others frequently, candidly, caringly, and clearly is incredibly important all the time, but even more so right now. You have your own responsibilities as a business owner and as an individual: there are bills to pay, meetings to schedule, deadlines to meet, and family or other social needs to fulfill. You have a lot on your plate, but that doesn’t excuse you from keeping open lines of communication so that your team and anyone else that you communicate with understands not only what’s expected of them but what they can expect from you. Be open and honest with your team, your customers, your bank, your landlord… everyone! We are in a unique situation in which we are all experiencing levels of the same circumstances. People may surprise you and be more supportive, receptive, and helpful than you give them credit for. So be the leader your business needs right now, and in return, learn to lean on those around you when you need them.

If you aren’t in the practice of keeping a journal or a log of sorts, now is a fantastic time to start. There are countless benefits to journaling, so many that I cannot get into them all here, but if you were to do a Google search you would find an overwhelming amount of research supporting regular journaling. Not only is journaling good for your mental health, but the simple act of recording what you’ve done each day and reflecting on the lessons that you learned from your actions and the actions of those around you will help you take steps towards successfully navigating these uncertain times. When faced with a problem it is often easier to break it down and solve it piece by piece. Looking at a catastrophic economic crisis and wondering how to steer your business successfully through to the other side will likely overwhelm you. So I encourage you to take a step back, keep a log of your actions and your lessons learned, and move forward step by step.

And lastly, do not stop moving. The biggest mistake you can make right now is to freeze. Whether you’re thinking about cash flow, how to pivot your business, or other steps you can take to keep your doors open, you need to take action. Action is always better than inaction. Think of riding a bicycle – it is at its most stable when it is in motion. As the bicycle begins to slow, it starts to wobble. As it comes to a standstill it is unable to stand on its own. So take action, and do it now. No matter how small the steps forward might seem to you, they are still steps in the right direction.

Finding a Silver Lining

Finally, I wanted to share with you some positivity that we finished our last meeting with. I called upon the participants to share their thoughts on what silver linings they have been able to find in the midst of all the chaos and concern that we find ourselves in.

  • Spending more time with their family and young children
  • The ability and the time to learn new skills and improve on existing ones
  • A feeling of gratitude for being able to continue to serve customers and help others
  • Initiating new projects – those “some day” tasks that often get pushed to the back burner are suddenly urgent to implement, or you simply have the time to get to them
  • Connecting and reconnecting with others on deeper, new levels
  • Building more of a sense of community and seeing the same develop worldwide

I challenge each of you to look for the silver linings in your life, and to allow yourself to be free of judgement about what YOUR silver linings might be. For some they are business related, others find more positives in their family lives, and others still are focused more on personal development. Our circumstances are strikingly similar right now, but still immensely different on an individual basis. Look for the opportunities, challenges, and silver linings in your life without comparing yourself to others.

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