If there is an eternal ghost that haunts each and every entrepreneur, it is the haunted spirit of CASHFLOW. No entrepreneur is protected against it. It sneaks up on you and can give you the fright of your life, literally. This is what takes businesses down. I caution you of this, so you know that it lurks within your business and I guarantee you that you will encounter it on several occasions.
At the start of this year, I had quite a substantial encounter with this Cashflow poltergeist. Clients did not pay what they were supposed to pay, some delayed payments, my investments were not that liquid and I needed few weeks to unlock it. The net effect is that expenses exceeded income, resulting in a strain on the business and on me.
How you rid yourself of this ghost is firstly acknowledge that you are seeing a ghost and that it is only temporary. Secondly, you hold the key to exterminate the current state, be fully aware of your own capabilities and only you can resolve the downturn you are experiencing. Thirdly, I told the people that mattered most to me, staff, key suppliers and family. My message was simply, “Brace yourself the ride is about to get rocky”. One of my staff members even offered to help and loan the company some funds to keep afloat. There is no room for egos, take the help if offered.
Lastly, I communicate my plan, on how I was planning to get out of the hole. As long as key stakeholders knew that I was doing something about it, they were more open to extend my payment terms.
In time like these, I prioritise by finding the closest point to the money. This is a tool I developed to prioritise my days, especially when times are tough. The question I ask is – What do I need to do now to bring in the quickest cash? This could be a refund that was due to you, it could be a small loan that was not repaid, it could be a cash customer or a trip to a customer to collect the cash. Make a list of the “money points” and then prioritise from quickest to slowest collections.
Now off you go, pursue the closest point to the money with vigour!