Repairing the Boat to Keep More Treasure: Cash
June 5th, 2013 was a dark day and stormy day because unforseen waves crashed upon our deck. We were told to vacate our current premises. This news came without a warning shot over our bow, but it struck us right in our hull and threatened to sink my business. Also, six months earlier I used all cash reserves to close a second location that just wasn’t developing as planned. It took a lot of courage, self-reflection and discussions with friends, mentors and family to discover that I really didn’t want to abandon ship.
For various reasons including my only employee leaving the initial blow was 40% of revenue! Without cash I was taking on water fast and was having a great deal of difficulty making payments to our accounts payable. My only option was to stay strong in mind and keep renegotiating with my vendors by letting them know our challenges and that I knew it would turn around.They understood and were patient because they also respected my integrity.
Thankfully, we were able to quickly find an independent fitness studio to operate out of. The studio owner also showed me a 900 square foot open clinic space in the same building which I could lease for the treatment room and business growth. After a few tense weeks I was able navigate through the murky waters of the district’s business licence rules to land my own clinic space. Finally my own island! A month of zipping upstairs to renovate between clients and weekends labouring my private oasis was open to clients on August 1st, 2013.
There were times when my faith wavered, but I knew that my business was one worth keeping and rebuilding. I also knew I had most of the necessary skills to repair the ship. The skill missing to keep more of my treasure was cash management. After reading several books on cash flow management I stumbled across Cash Flow Management Mojo by Sandra Simmons.
Most of the information I found on cash flow management didn’t really explain how to build in cash reserves for growth, taxes and emergencies while others were too complicated or did not link budgets with sales goals while Sandra’s software and book do. Tired of bailing out water with a small bucket I started to attend a bi-weekly business mindset group where we set three levels of two-week heart centred profit goals – achievable, stretch and outrageous.
Learning cash flow management is much like learning a trade. With some trepidation and optimism I signed up for the cash flow management mojo software online. Many fitness and rehabilitation entrepreneurs are excellent practitioners but like myself also lack some key business skills. It took me six years to figure out how to manage with cash.
Who knows better how to manage cash than Warren Buffet? He buys businesses with cash on hand and believes that the majority of growth should be cash-based. Warren Buffet is also keen and trimming any excess costs. I took a look at our expenses to trim so of the fat. Something to do every 3-6 months so that costs don’t get go overboard. In two weeks our vendors were current a month before my goal. Two weeks later the cash was available to invest in an iPad, a tool to enhance our services that I had been eyeing since 2010!
Each week ends with allocating cash to pay bills and for savings followed by the setting of income goals for the following week. The rest of the week my mind is solely focused on providing oustading service to our clients. Ah, now I can rest my weary head knowing that the ship is repaired and my island is safe.