I've worked with people who get a credit line or a working capital loan, and have no idea of what happened to it.

They are unhappy and upset that they took the loan, and feel like they made a mistake. They did make a mistake, but it is not taking the loan. The mistake is spending the funds without understanding where or why, instead of using the funds for targeted expenses.

In the past, I have talked about how to plan to use loan funds that are coming in from PPP, EIDL, or commercial financing sources. Here are the basics:

1. Use a separate account for loan funds to ensure they are used for the planned purpose
2. Use a 13-week cash flow model to plan the use and the repayment
3. When you can, put excess funds back into the loan account so you don't just spend the "extra"

If you want, subscribe to my YouTube channel to make it easy to find all of my videos, including a webinar where I discuss this very issue.

Question: What do you think the biggest challenge will be for companies...

Did you know that cash flow management is mostly a mental game?

Yes, you need to do all of the numbers, the pluses and minuses, but that's the easy part of cash flow. The hard part is the management of your cash flow. Here are some cash flow management activities that take emotional intelligence and clear thinking to get right:

1. Confidence in projections
2. Good relationships and open communications with vendors
3. Creative solutions for bringing cash in faster
4. Ideas to pay vendors later
5. Working with all stakeholders (employees, vendors, creditors, etc.)

A key observation about business owners in financial trouble is they can't handle the situation emotionally. They don't prioritize or make decisions well. I help them make decisions.

Do you need help implementing a cash flow management system? Call or message me on WhatsApp (+1.510.3566).

What do you think is the hardest part of implementing a cash management system? Let me know.

E-mail me your comments at...

Inventory, inventory, inventory...who deals with inventory?

Anyone in your company who helps you with inventory is a key player in your cash management! 

Here are a few thoughts about inventory and cash:

Smaller is usually better. An Optimal amount is best.

If possible, don’t own the inventory, but keep it nearby or on hand.

Look at suppliers as key partners to help you keep investment costs down.

NOTE: The investment is the amount you buy before you use it. Cost is what you pay.

The lowest cost per unit is not always the lowest cost of acquisition.

I could keep going and going!

All of these impact your cash going out of the company.

The worst problem I've ever seen was a retailer that had over a year of inventory.

What’s the worst inventory problem you’ve seen?

E-mail me your comments at [email protected]

Do you ever read cash flow articles to learn how to improve your cash flow?

If you do, beware of the advice you read! Most articles have "common knowledge" lists that are often bad decisions for many businesses! There is usually a final recommendation that directly relates to something that the author is selling.

Worst of all, the fixes are usually cosmetic but don't dig down into fundamental profitability.

If you want to fix YOUR cash flow, I suggest the following to start:

1. List all of the issues that you know are causing your problems
2. Start fixing the biggest problem and the easiest problem to fix at the same time.
   - Fixing the easiest problem will give you momentum
   - Fixing the biggest problem will help you the most
   
   Here is the key issue: Are you fixing the underlying problems or just the symptoms?
   
   If you are just fixing symptoms, you will have the problem over and over again.
   
   Any thoughts?

   E-mail me your comments at [email protected]

Sometimes cash flow issues are not about the cash. They are about the people involved in a business, the emotions, and the mindset.

"I am very appreciative of the time David was willing to spend with me. From the first contact, he was warm, welcoming, and sincere and that carried over to and throughout our initial consultation. David's advice and feedback were certainly helpful in regard to the nuts and bolts of my situation, but also, and possibly more importantly, in regard to my personal mindset and view of the challenges faced. 

I am impressed with David’s vision of how he can help small and large businesses alike become more efficient and effective. I am equally impressed by the way he is going about accomplishing that vision! I am happy to give my recommendation."

Cash flow and business challenges can be very emotional. It is never "just business."

Are you totally detached and unemotional about your business?

E-mail me your comments at [email protected]

As a manufacturer running at full capacity, can you still grow sales?

That all depends on your creativity, your willingness to say “no” to clients and products, and your ability to analyze sales.

Let me tell you about a success story along these lines...

My clients were at maximum capacity.

Sales were falling.

Margins were falling faster.

We analyzed and adjusted the product mix, distribution channels, and pricing model.

The result?

In about one month the distribution model changes were generating an additional $20,000 a month in sales.

The incremental sales generated 95% margins.

These were perpetual results for a company with about $2.1 Million in annual revenue.

Want to learn more?

Do you have questions about how we achieved this?

E-mail me your comments at [email protected]

Do you know that crowdfunding can be an effective cash management tool for raising capital?

Crowdfunding is pre-selling products that are in development. You owe people something, but usually at a good profit margin. You don't sell equity in your company and you don't go into debt. You do get:

- Publicity before you launch

- Feedback on your product

- Ideas for additional product

- An idea for market acceptance

- Names for your mailing list

- The cash you need to launch the product or business

Most people think of Kickstarter or Indiegogo (I've used Indigogo) as only for new companies...wrong! You can introduce new products as well.

I've done crowdfunding for non-profit as well as for-profit organizations. Possibilities for funding:

- Book launches

- Food vendors

- Manufacturers

- Service providers

- Race/adventure organizers

- Non-profit fundraising

The possibilities are literally endless.

Have you done any crowdfunding? 

Have you bought something from crowdfunding? I've only had positive...

What's the one thing that business owners never talk about when I ask them to tell me about their business?

Cash management.

I don’t blame them. They didn’t start their business to manage cash. They started their business to do something they really enjoy and get paid for it – like create websites, sell real estate, practice law, do collision repair, or any of a million things that people enjoy doing to make money.

When I start working with a business that has a cash crunch and may not survive, I first work with the business owner’s mindset.

I help them understand that while managing their cash isn’t what they want to do, it will keep their business alive so they can do what they love to do. It allows them to spend more time and energy on what they love, but only after their cash management systems are in place.

Check out my article about 5 Key Mindsets.

Want to talk about managing cash in your business?

Then tell me, what's your biggest cash management...

What are two critical times when cash management is really important? When a business is shrinking and when a business is growing.

Businesses with shrinking sales have smaller profit margins to pay your bills and to pay yourself.

The result: Cash shortfalls due to a decreased amount of cash coming in.

Seems obvious, but what isn’t obvious to most businesses owners is how to:

• Cut expenses that are not critical to the core businesses
• How to get paid faster
• Slow the cash going out for critical expenses
• Maximize profit margins
• Engage employees in all of this

Growing business: You have more profit margin to pay your bills and to pay yourself.
 

Again, this seems obvious.

What many business owners don’t plan for is the delays of the cash coming in to pay those bigger bills.

A staggering number of businesses get themselves into serious trouble because they grow too fast and don’t have the resources in place, including...

Each company is unique. Your company is unique. So why use a generic chart of accounts?

Think about the story you want your reports to tell, then structure your chart of accounts, classes of business, items, and everything else that you can possibly configure in the software, to get reports personalized for your
business’s needs.

Some ideas for structuring your chart of accounts and configuring your software:

• Track multiple revenue streams from product types or client segments
• Identify key expenses of delivering goods and services to your clients
• Know your profitability by client, product, revenue source, lead source

The possibilities are endless, so focus on what are the most important factors that ensure your business will succeed. Those factors are what you want to build your record-keeping and reports around.

What’s the story you want to know about your business?

E-mail me your comments at [email protected]