Get Into (Cash)Flow
Read Time: 3.5 minutes
Before we dive into this week’s newsletter…
I am thrilled to announce the premier launch event for my new book which will take place on March 8, 2023 at Natural Products Expo West in Anaheim, California!
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Now, let’s jump into it.
Get Into (Cash)Flow
In life and in business, there's never enough budget.
Even when my team built my former company, Manitoba Harvest, past the $100 million revenue mark, we always had to have a prioritization list of things that we wanted to do, which we had to balance against our financial plan of what we could afford to do.
But when you're running a start-up, your priorities are going to change more rapidly, and often. You may have to choose between delivering your product on time, for example, and paying for the trade show booth that will guarantee your next twelve months of grocery store shelf space. No amount of customer love or public acclaim for your product counts for more than a positive financial cash flow. Unless you can generate sufficient revenue — or keep raising funds — then you’re going to go bust.
As they say in the retail business, turnover is vanity, profit is sanity, but cash is reality.
So let's talk about the nitty gritty financial details that you should be considering when building your business. What’s needed in the big financial equation, especially when you have to get good at what you're doing in a very short period of time before the money runs out?
Be prepared.
Like an accordion, entrepreneurial ventures get squeezed. Balancing the money you have to spend and the activities you need to fund is a given. But when starting and growing a business, your sales, marketing, and operations plans are all going to require financial shifts, sometimes over and over again. If you need to change direction because you’re learning as you go, where are you going to find the cash? Can you prepare different financial projections based on a range of options to see what fits best? Are your plans achievable? When can you expect results?
Understand that it costs money to acquire customers. Always.
You need to anchor your financial plan with your actual operation plan to make sure they're connected. When you’re going after revenue growth and you’ve determined how many customers you need to reach your next goal, you also need to know how much it’s going to cost to acquire those customers. Your salespeoples’ time, marketing spend, and the physical space to pack all of the new orders you want to deliver: all of these things have to come into play when you’re budgeting your cash flow.
Have a buffer, and double it.
Things cost more that you expect them to cost, and business processes can take longer than you expect them to take. And that's the true reality for entrepreneurs. If you make a plan with no wiggle room, you're likely going to fail. Create a contingency account that is perhaps even separate from the rest of your financial accounts, and make sure you have clarity about what you’re willing to spend it on. Operational emergencies? Sudden sales trips? Allow for flexibility when it comes to using your contingency funds, but also be aware of what you might be giving up.
Remember that little things add up.
When you’re building something new and you’re counting on a big-ticket purchase to add value to your bottom line, sometimes you’re going to have to make some financial sacrifices at the last minute. You’re ordering new, faster equipment? Did you budget for extra electricity to run that equipment? Travelling overseas to a sales conference? Did you think about the cost of shipping your samples ahead of time? Found a new distribution partner at that conference? Do you have the cash flow to spend another week in a hotel touring retail locations and setting up the deal?
Weather the storm.
There is a point where you’re going to have to make financial cuts, at least in the short term. Even the most successful entrepreneurs have had to do this multiple times in their careers. Think of it as an exciting prospect. Cutting back can be challenging in a positive way if you think about it as a strategy rather than a burden.
If you want to be unstoppable, you have to plan your cash flow and not just your revenue streams. Sure, you want to get money in the door, but part of being an entrepreneur is also setting the stage for every strategic option that will serve your business.
Get into your cash flow. And get ready to grow.
I hope you enjoyed the read and are ready to think more strategically about growth.
Until next time.
Let’s Grow!
Here are 3 other ways I can help you grow:
Work with me 1:1 to grow your business.
Listen to my Founder to Mentor podcast. (new episodes weekly)
Get my free mentorship growth tools at www.fatafleishman.org.
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