Why Growth Is Killing Your Cash Flow

3min Read

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

Please Don't Put Yourself On Mute

During a recent meeting on Microsoft Teams, I couldn't seem to get a single word out.

When I tried to chime in, I kept getting interrupted. At one point two individuals talked right over me and over each other. When I thought it was finally my turn, someone else parachuted in from out of nowhere. When I raised and waved my hand as if I was in grade school to be called on (yes, I had my camera on) we swiftly moved on to the next topic. And then, completely frustrated, I stayed on mute for the remainder of the meeting. I even momentarily shut off my camera to devour the rest of my heavily bruised, brown banana. (No one needed to see that.)

This wasn't the first time I had struggled to find my voice. Since elementary school, I always preferring the back seat unless the teacher assigned me a seat in the front. In high school, I did piles of extra credit or mini-reports to offset my 0% in class participation. In college, I went into each lecture nauseous and with wasted prayers — wishing and hoping that I wouldn't be cold-called on by the professor.

By the time I got to Corporate America, it was clear that if I wanted to lead, I needed to pull my chair up (and sometimes bring my own), sit right at the table front and center, and ask for others to make space for me. From then on, I found my voice and never stop using it.

But now, all of a sudden, in this forced social experiment of mass remote working, I was having trouble being heard… again. None of the coaching I had given myself and other women on finding your voice seemed to work when my voice was being projected across a conference call and not a conference room.

I couldn't read any body language. I couldn't see if others were about to jump in and I should wait or if it was my time to speak. They couldn't see if I had something to say. For our Microsoft teams setting, you can only see a few faces on your screen, the rest are icons at the bottom of the window with a static picture or even just their name. And, even then, I couldn't see some people simply because they wouldn't turn their cameras on.

If I did get a chance to speak and cracked a funny joke, well, I didn't hear any laughing. Most people were on mute. Or maybe the joke wasn't that funny?

At one point, I could hear some heavy breathing and the unwrapping of (what I could only assume was) a candy bar. I imagined it was a Nestle Crunch Bar as my tummy rumbled in response to the crinkling of unwrapped candy. (There is a right and a wrong time to mute, people.)

At another point, I did see one face nodding at me blankly.

They say that remote working will be good for women. They say it will level the playing field. They say it will be more inclusive. But it won't be for me and others if I don't speak up now.

  • Start with turning your camera on and encouraging others to do the same. I was recently in a two-person meeting. My camera was on, but the other person wouldn't turn theirs on. In that case, ten minutes in, I turned my camera off. You can't stare at my fuzzy eyebrows and my pile of laundry in the background if I can't do the same to you. When you have a willing participant, you'd be surprised by how helpful it can be to make actual eye contact with someone, even on a computer (and despite the fuzzy eyebrows).
  • Use the chatbox. Enter in your questions. Enter in your comments. Dialogue back and forth. Type in a joke. I did that recently and someone entered back a laughing face — reaffirming that I was, indeed, funny.
  • Designate a facilitator for the meeting: someone leading, coaching, and guiding. On my most recent call, a leader went around ensuring everyone was able to contribute fairly. She also ensured she asked for feedback on a specific topic and helped move the discussion around so no one person took up all the airtime.
  • Unmute yourself. Please don't just sit there on mute for the entire meeting. Jump in and speak up. You will be interrupted. You will interrupt others. But don't get frustrated or discouraged — this is what work is now — just keep showing up and contributing.
  • Smile, and smile big. Nod your head in agreement. Laugh. Give a thumbs up; give two! Wave. Make a heart with your hands. Signal to others on the call who are contributing that you support and value them. They will do the same in return when your turn comes to contribute.

It's too easy to keep your camera turned off. It's too easy to stay on mute. It's too easy to disappear. But now is not the time to disappear. Now is the time to stay engaged and networked within our organizations and communities.

So please don't put yourself on mute.

Well, actually, please do put yourself on mute so I don't have to hear your heavy breathing, candy bar crunching, or tinkling bathroom break.

But after that, please take yourself off mute so you can reclaim your seat (and your voice) at the table.