#SWAAYthenarrative

Why Growth Is Killing Your Cash Flow

3min Read
Finance

There are two—old—pieces of advice for business owners looking to grow:


  • In order for your business to make money, you need to spend money.
  • If you want to create cash in your business so it can grow, you either need to get more clients or cut expenses.

That advice sounds great. There's just one catch. Even though there's not enough cash in your business to do the things you need to do, you're about to fall over you're so busy. To serve more clients, you need more team members, new equipment, guidance from mentors, new technologies. And they all require investing cash you don't have, leaving you in a Catch 22.

While you've been told that growth is the answer to your prayers, the reality is that business growth devours cash, sucking you into a never-ending cycle of needing to grow more, work harder, and deliver to clients faster until you are ready to spontaneously combust with frustration and exhaustion. This concept of business growth isn't working anymore.

Growth investments have a timeline.

If you invested in a five year CD, you have the understanding that you won't get a return until the end of those five years. Small business owners tend to think of investments in growth as quick returns, a sure thing. But growth doesn't happen that way.

Often the bigger the investment, the longer the timeline to see the cash return to the business. On the short end, you could begin to see a payoff in 90 days. More than likely though, the investment will need 12—18 months to show a return of cash to your business. Could you afford to make a five-figure investment in growth and wait 18 months for it to pay off? Very few could. Here's why:

Most businesses are investing cash they don't have. They are robbing Peter to pay Paul because of two things:

  1. Business Owners don't understand that the revenue they are bringing into the business isn't available because it was pre-spent. If you've ever made a purchase or investment, only to have a cash emergency within the next 1—2 months, then this is the problem you had. You spent money you didn't actually have because it was already spent somewhere else in the business.
  2. Most businesses are running on 14 days (or less) worth of cash. If you stress out about making payroll every month, but always seem to make it, this is the problem in your business.

Both of these are cash management issues.

Don't be fooled into thinking that this is a smaller business's problem. This issue is more likely to happen in businesses nearing or just past seven figures in revenue than it is with smaller businesses. The problem is masked in larger businesses because there is a constant flow of money.

If you are already getting consistent clients, both of these 'symptoms' are classic signs that you have outgrown the early stages of growth. It's time to move into the scaling stage in your business. To make this shift, you need to change how you manage the money in your business.

Find the Cash First

Back to the old paradigm of it takes money to make money. The thinking trap most owners fall into is that you have to grow first and then the cash flows. In the new paradigm, you get the cash first, then you scale.

The first step is to conduct a Business Audit that looks at how you can activate more cash with the business you have by looking for where you are:

  1. Leaving Money on the Table
  2. Ignoring Low Hanging Fruit Opportunities
  3. Leaking Money
  4. Missing the Profitability Mark
  5. Managing Strong Metrics

You then use all this information to activate the cash already hiding in your business. The audit also identifies your scalability factor and enables you to forecast where your business could go in the next 12—18 months if you focused on removing obstacles and taking advantage of opportunities.

Change Your Cash Intention

Most business owners expect profit to happen at the end of the year. Profit doesn't 'happen' at the end of the year. Profit comes into the business with each sale, and flows out the door for a million different reasons. If you have ever had your CPA say you made a profit, but you can't find it in the bank account, then you need a profit plan.

If you've read Profit First by Mike Michalowicz, then you understand the basic premise. A profit plan essentially puts intention toward your business's profit on a weekly, monthly, or quarterly basis. The plan is different from owner to owner, but the process is that you take profit first, measuredly throughout the year. You transfer the profit out of the operational check account and give it purpose. Because you are not touching the money, the profit grows.

As your profit accounts grow, you gain the ability to make the investments that will help you scale without hurting the operations of the business. Instead of these investments causing stress, you feel powerful and successful.

Get a Crystal Ball

Ever wish someone could tell you the future? We all do, especially when it comes to managing money in business. Well here's a crystal ball for you—it's called a predictive cash flow tool. Imagine bringing your budget, your standard bills, and your sales pipeline together to form a more complete picture of your money. The tool I use with my clients is PocketSmith, but there are several on the marketplace including Float, Dry Run and Pulse. It syncs to your bank accounts and has a nifty calendar function that can allow you to see your anticipated daily account balances for up to 10 years in the future.

Managing the cash differently in your business requires you to move past the "balance the checkbook" management and use a tool that is as real-time as possible. Once you can predict your cash, you can make better money decisions in your business.

It takes a few hours to set up, but once you do, it takes less than 15 minutes to update and manage the tool every week. The payoff is that you can see where the trouble spots are. You can see what would happen if you make an investment here or what happens if a client delays a project (and payment) by a month.

All of these strategies are like creating a Waze pathfinder for your business. It gives you the confidence to manage your cash, make investments, and build the profit in your small business all while building financial stability. Now that's something to celebrate and carry into the New Year!

4 Min Read
Business

Today, Companies Need to Retain Veteran Employees in Order to Survive and Thrive

In 2020, as the world turned on its axis, we all held on for dear life. Businesses, non-profits, government organizations, and entrepreneurs all braced for a new normal, not sure what it would mean, what would come next, or if we should be excited or terrified.

At the same time that everything is shifting, being put on hold, or expanding, companies have to evaluate current talent needs, empower their teams to work from home, discover new ways to care for clients from a distance, and navigate new levels of uncertainty in this unfamiliar environment. Through it all, civilians are being encouraged to lean into concepts like "resilience" and "courage" and "commitment," sometimes for the first time.

Let's contrast what the business community is going through this year with the common experience of the military. During basic training, officer candidate school, multiple deployments, combat, and reintegration, veterans become well-versed in resilience, courage, and commitment to survive and thrive in completing their mission. Today, veterans working in the civilian sector find the uncertainty, chaos, instability, and fear threading through companies eerily familiar.

These individuals do not leave their passion and sense of service behind when they separate or retire out of the military. Instead, typically veterans continue to find avenues to serve — in their teams, their companies, their communities.

More than ever before, today's employers who employ prior military should focus on why and how to retain them and leverage their talents, experience, and character traits to help lead the company — and the employees — to the other side of uncertainty.

What makes veterans valuable employees

Informed employers recognize that someone with a military background brings certain high-value assets into the civilian sector. Notably, veterans were taught, trained, and grounded in certain principles that make them uniquely valuable to their employers, particularly given the current business environment, including:

Leadership

It's been said that the United States Armed Forces is the greatest leadership institution in the world. The practices, beliefs, values, and dedication of those who serve make them tested leaders even outside of the military. Given the opportunity to lead, a veteran will step forward and assume the role. Asked to respect and support leadership, they comply with that position as well. Leadership is in the veteran's blood and for a company that seeks employees with the confidence and commitment to lead if called upon, a veteran is the ideal choice.

Commitment

The hope is that all employees are committed to their job and give 100% each day. For someone in the military, this is non-negotiable. The success of the mission, and the lives of everyone around them, depend on their commitment to stay the course and perform their job as trained. When the veteran employee takes on a project, it will be completed. When the veteran employee says there's an unsurmountable obstacle, it is so (not an excuse). When a veteran says they're "all in" on an initiative, they will see it through.

Strategy, planning, and improv

Every mission involves strategy, planning, and then improvisation from multiple individuals. On the battlefield, no plan works perfectly, and the service member's ability to flex, pivot, and adapt makes them valuable later, in the civilian sector. Imagine living in countries where you don't speak the language, working alongside troops who come from places you can't find on a map, and having to communicate what needs to get done to ensure everyone's safety. Veterans learned how to set goals, problem-solve challenges, and successfully get results.

Service

With an all-volunteer military for decades now, every man and woman who wore our nation's uniform raised their hand to do so. They chose to serve their country, their fellow Americans, and their leaders. These individuals do not leave their passion and sense of service behind when they separate or retire out of the military. Instead, typically veterans continue to find avenues to serve — in their teams, their companies, their communities.

When companies seek out leaders who will commit to a bigger mission, can think strategically and creatively, and will serve others, they look to veterans.

Best practices in retention of veteran talent

Retention starts at hiring. The experience set out in the interview stage provides insight about how it will be to work and grow within the team at the company. For employers hiring veterans, this is a critical step.

Veterans often tell me that they "look to work for a company that has a set of values I can ascribe to." The topic of values can serve as an opportunity for companies seeking to retain military talent.

The veteran employee may have had a few — or several — jobs since leaving the military. Or this may be their first civilian work experience. In any case, setting expectations and being clear about goals is vital. Remember, veterans are trained to complete a mission and a goal. When an employer clarifies the mission and shows how the veteran employee's role supports and fulfills that mission, the employee can more confidently and successfully complete their work.

Additionally, regular check-ins are helpful with veteran employees. These employees may not be as comfortable asking for help or revealing their weaknesses. When the employer checks in regularly, and shows genuine interest in their happiness, sense of productivity, and overall job satisfaction, the veteran employee learns to be more comfortable asking for help when needed.

The military is a values-driven culture. Service members are instilled with values of loyalty, integrity, service, duty, and honor, to name a few. When they transition out of the military, veterans still seek a commitment to values in their employers. Veterans often tell me that they "look to work for a company that has a set of values I can ascribe to." The topic of values can serve as an opportunity for companies seeking to retain military talent. Make it clear what your values are, how you live and act on those values, and how the veteran's job will promote and support those values. Even work that is less glamorous can be attractive to a veteran if they understand the greater purpose and mission.

Today, veterans working in the civilian sector find the uncertainty, chaos, instability, and fear threading through companies eerily familiar.

Finally, leveraging the strengths and goals of any employee is critical, and particularly so with veterans. If you have an employee who is passionate about service, show them ways to give back — through mentoring, community engagement, volunteerism, etc. If your veteran continues to seek leadership roles, find opportunities for them to contribute at higher levels, even informally. When your veteran employee offers to reframe the team's mission to gain better alignment across the sector, give them some runway to experiment. You have a workforce that is trained and passionate about and skilled in adapting and overcoming. Let them do what they do best.