Part I – The Client Connection and Expense Expedition

 

Whether you’re steering a brand-new startup or navigating the high seas of a $300 million empire, one thing’s for sure: at some point, you’re likely to face the dreaded cash-zero crisis. 

But fear not, because we’ve got your back!

In this two-part series, we’re diving into some savvy tactics to get you out of the red zone.

There’s no shame in a cash shortage; what matters is that you acknowledge it as early as you see it and then tackle it head-on.

 

Before we embark on this cash-saving journey, though, here are a couple of crucial things to keep in mind: 

  1. Know Your Numbers Inside Out: Before you start borrowing or maneuvering finances, you need to be crystal clear about how much money you need and for how long. Having a solid business forecast and plan that highlights these details is a real key here to up your game and the possibility of getting approved for borrowing.
  2. Believe in Your Business: Only opt for these strategies if you’re confident in your ability to execute your business plan, pay back any debt, and come out stronger on the other side.
  3. Coordination is Key: These tactics work best as part of a well-coordinated cash flow and debt management plan. Don’t just throw darts at the wall; strategize and plan how it starts, how it plays out, and how it ends. 

 

FINDING THE CASH THAT’S ALREADY IN YOUR BUSINESS 

 

TIP 1: Check On Your Customers

Do you have clients who owe you money?  

First: Is any of it overdue? In that case, it’s time to have a heart-to-heart with them. 

Second: Maybe it’s not overdue, but they are on a payment plan, and they are already paying on time each month. Here’s where you have a new opportunity to bring cash in faster: 

Offer them an enticing deal to pay you back early and sweeten the pot for them so it’s a Win-Win. 

For instance, if you typically charge $250 per month for a membership, consider saying something like this:  

         “I’m thrilled to announce that we’re making exciting improvements to our program to enhance its value to you even further.  

         As a special limited-time-offer, since you are a premiere member, instead of paying us $3,000 over the next 12 months, we will discount your program cost to $2,250 if you make a single payment now; or if you’d like to make it in two payments over the next 60 days, we can reduce it to $2,500! “

Tweak the numbers, language, and timeline to fit your situation, but the key is to accelerate a payment arrangement to inject much-needed cash into your business. Set a near-term deadline for them to seize the savings and pay up promptly.

 

TIP 2: Trimming the Expenditure Fat

Let’s dive into the realm of expenses—a job we often put off but holds a gold mine. Honestly, it’s like finding enough change in the couch to pay for your next grocery run.   

Just download a detailed report by vendor from either your bank or your bookkeeping software (or better yet, have your bookkeeper do it). Then take a look at it and rank them: 

  1. Business-critical; no substitution
  2. Important, but there may be more cost-effective option
  3. Nice to have, maybe when cash flow is positive again
  4. Wow! I thought I’d canceled that! 

I promise you – you will be surprised at how many expenses fall into the last two of those categories. We get busy as entrepreneurs, so it makes sense that these can pile up. 

Just a quarterly checkup on all your subscription services and software costs alone will pay for itself here. 

But I will tell you that I had someone review and handle this for me than she saved me 10x the cost of the hours she put into it – ANNUALLY. Don’t kid yourself that your expenses are in order and not worth reviewing! 

But tread carefully! If you’re in growth mode, it’s essential to cut costs without obstructing the cash flow. Remember, “Trim the fat, but don’t nick an artery.”

 

TIP 3: Swap Time for Money 

I don’t love this as a first line of defense, but if you’ve been through Tips 1 and 2, and still have an issue – it’s time to look at yourself. Identify things you currently pay for where you’re willing to cover the bases yourself for a little while. Caution though: Don’t overdo it here or you run the risk of nicking that artery we talked about above! Be realistic about what you can take on.

 

Next week, we’ll continue our series with a deep dive into credit access and debt restructuring options. Stay tuned for more financial insights to keep your ship afloat! ⛵💰