I’ll never forget the day my father, Neil, stood on a box in front of the entire company. He was the President; I was 22 years old and was the entire “IT department.” 90% of the 150 employees worked in the factory.
He stood up and said, “Our company is in trouble, but we have a plan to survive and then grow again. Part of the plan is asking all employees to take a 10% pay cut.
“The senior staff will be taking a 20% pay cut.
“I know that this is not easy for anyone, but we commit to raising the wages back as soon as possible. Any questions?”
After a few complaints, a tall and broad man named “Big John” raised his hand. He said with a crack in his voice, “I’ve been laid-off twice. No one ever asked my opinion or gave me a choice.
“Thank you for asking. I support the reduction 100%.”
Everyone fell in line after that.
The company survived and wages were eventually restored.
The lessons I learned?
Let me tell you a story. Tony gave me 3 weeks to train his 20-year-old son to be a financial guru.
Tony ran a collision and towing company that was in trouble. His father started the company and his son, Frank, wanted to take over. The fundamental problem with Tony׳s plan: he wanted Frank to start at the top.
I love family businesses, but they’re often dysfunctional when younger members are given responsibilities well beyond their current capacity.
Frank understood the number theory, but he didn’t know the business. He didn’t realize:
The biggest challenge? Nobody had taught Frank how to dig deep by asking the right questions. He wasn't prepared to do what was asked of him.
If you own a business that is facing challenges, let me know. I know how to dig deep quickly and effectively and offer solutions to fix...
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.
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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...