If you are in a cash crunch, will a loan help, or just make things worse? Or for that matter a capital infusion from a new partner? Or cash from your personal bank account?

The answer all depends on your ability to manage your cash and understand your cash flow. Depending on your situation, a loan could dig a deeper hole, a new partner could end up in a lawsuit, or could be throwing your good money into a bad situation.

Here are three basic scenarios:

1. You have complete understanding and control and know that the money will pay off through profitable business activities and healthy growth. Bring in more cash.

2. You don’t have a complete understanding, but you 100% know that for a particular project, order, or capital investment there will be a payoff. Bring in more cash just for that project or order.

3. You just don’t know what will happen, but you need the cash to survive. In this case, do everything you can to avoid bringing cash in until you know what will happen. Usually, it w...

What do you think? A new connection asked me if he could get to where I am without my educational background (he has a professional certificate and additional professional training, but no 4-year degree.) I first commented that I wasn't sure that he knew where I was, nor where he wanted to go.

Then I said, "Yes, you can get to where you want to be." My concern is that he is not sure where he wants to go.

I get the same type of questions from clients:
"Will I ever have money in the bank?"
"Can I ever stop having huge cash swings?"
"Does my business have a chance to get to the big leagues?"

The answer is always, "Yes, you can get to where you want to be." Then we have two discussions:

1. Where do they want to be?
2. How can they get there?

So what do you think, can people get to wherever they want to go? Can companies always have the success the owner wants?

E-mail me your comments at [email protected]

The quality of your team can have a HUGE impact on your cash flow. You are much better off paying ABOVE market wages and benefits to a smaller number of "A" and "B" players than trying to save some money hiring average people at lower wages.

Here are two examples:
 

• A manager at a bridal shop who ran all sales and marketing. She was not paid in line with the results, asked for more, was told "no", so she left. When the store owner realized how much work was being done, a sales manager and a marketing manager were hired. The sales manager wasn't up to the job and quit after a few months.
   
• We reorganized a division that was losing a LOT of money. We laid off 50% of the workforce that did not have the skills or attitude that was needed. We rehired back 25% of the headcount with people with the right skills. We needed to pay much more per person and saved very little on compensation. The smaller team produced much better results and we were profitable within 1 year. 

People think that...

The COVID-19 global pandemic is a wake-up call to ALL business owners to take responsibility for their company finances.

I posted that financial advisors are responsible for the companies they work with to have good financial plans, including a 13-week cash flow model. Now, I am putting the responsibility 100% onto business owners. There are no more excuses.

For too long business owners have said...
"It's not about the money, it's about the people."

"I do it for the love of my craft."

"Someone else can deal with the finances."

"I want to be my own boss, but so I decide that I only want basic bookkeeping."

Now a tiny virus has told you that you are wrong.

You are in business. Business is about the numbers.

Not only numbers, but if you don't have money, you can't...

...help people
...work your craft
...let someone else worry
...be your own boss

If you survive this downturn, fix your finances.

Start with a cash flow model that tells you how long you can survive. (Put "Cashflow" in the comments if you wa...

Profit does not mean that there is cash in the bank. A growing bank account does not mean that you are making a profit.

Surprised? You're not alone. Most schools, CPAs, news reports, etc. focus on a company’s earnings, profits, and sales. That’s because those same institutions are geared toward teaching, working for, and reporting for BIG big businesses and public companies.

But if you are a small business, your most important measurements for the next 3 months or so have to do with cash:
 

• How much cash is coming into or going out of the company?
• What is your cash balance projected to be?
• Do you have cash or credit reserves to get you through cash shortfalls?

So don’t be fooled by “the establishment” into thinking “profit, profit, profit.”

Think: “Profit with sustainable cash flow!”

Let me know if “profit without cash” is a new concept to you, or if it’s not, how you learned about the concept!

E-mail me your comments at [email protected]

No money to pay your bills? Don't borrow money, just don't pay your bills.

You have to pay them at some point, but there are tactics to slow down money flowing out of your bank account.

But FIRST... here are some bills you need to pay on time:
Payroll.
Payroll.
Payroll.
Anything that puts you in breach of contract and puts your business, your home, or your health at risk.

Other than that, most bills can be postponed past the due date without dire consequences.

Look at bills that you owe large corporations, who are used to delays. Telephone, internet, utilities, insurance companies. You may be able to wait up to 60 days without consequences. Let them know when you'll be paying.

Suppliers: Make sure that you talk with them. Make payment arrangements. Don't surprise them. Make a partial payment. Many times your relationship is more important than delaying payment.

Mortgages and rent: Most have a no-penalty grace period. Use it when you need to.

Please, be careful with solo-entrepreneurs and small-bu...

On this episode of Fortnight Cash Flow, David talks with DryRun's Jeremy Burke discussing simple cash flow optimization techniques that you can implement in your own business. 

Are you a cost center or do you provide a documented return on investment (ROI) for your clients?

Most companies, non-profits, and government institutions view accounting, bookkeeping, tax preparation, and financial analysis as an expense that needs to be endured. Because of this, they often look for a low-cost provider that meets a minimum standard, like a certification.

Examples would be a QuickBooks Advisor, accounting degree, or CPA or Chartered Accountant.

There are literally millions that have certifications of each type.

What if you could show an ROI to clients?

Show them that for every dollar, pound, Euro, lira, or peso they spend they get to save or make 5x, 10x, 100x, or even 1,000x what they spent?

The best way to do that is through advisory services which help improve a company's financial performance.

If this interests you, register here for the on-demand webinar which explains this opportunity further. It could be a perfect fit for you and your practice.

The quality of your team can have a HUGE impact on your cash flow. You are much better off paying ABOVE market wages and benefits to a smaller number of "A" and "B" players than trying to save some money hiring average people at lower wages.

Here are two examples:
- A manager at a bridal shop who ran all sales and marketing. She was not paid in line with the results, asked for more, was told "no", so she left. When the store owner realized how much work was being done, a sales manager and a marketing manager were hired. The sales manager wasn't up to the job and quit after a few months.

- We reorganized a division that was losing a LOT of money. We laid off 50% of the workforce that did not have the skills or attitude that was needed. We rehired back 25% of the headcount with people with the right skills. We needed to pay much more per person, and saved very little on compensation. The smaller team produced much better results and we were profitable within 1 year.

People think that this is...

Most business owners' eyes glaze over when I talk to them about the "chart of accounts."

Then we talk about what they are trying to understand about their business's finances. They generally want the same thing:

- How much money am I making?
- How do I know if I'll have enough money to pay the bills?
- Which products and services make the most money?
- Do I have extra expenses that I can cut?
- Do I have enough capital to grow?

When I explain that the chart of accounts is the foundation for understanding each of those questions, they get more interested.

I explain that the chart of accounts is a list of categories.

Then I tell the business owner:
• Where sales come from
• Where expenses go
• What the assets are (what's owned)
• What the liabilities are (what's owed to others)
• What the difference is between what's owned and what's owed. This is called the “equity” in a company.

They quickly understand that with the right chart of accounts they can get all the reports they need to understand their ...