FROM THE EMPRESS BLOG

How to bridge a cashflow crunch

DR JOANNA MARTIN

Co-founder Empress Global

It doesn’t matter how successful we are, and how many millions in revenue we turnover, any entrepreneur knows there will always be unexpected expenses and bills. We plan impeccably. And then from time to time we are caught with a negative cashflow.

 

So what do we do?

Our Empress members are all successful business women, but this issue comes up not infrequently during the growth period of a business. So let’s take a look at how to approach it.

On a recent mentoring call, one of our members, H, brought the challenge: “I need to bring in cash this month to cover some unexpected bills.” It was causing her to re-think some well laid growth plans she had for her business.

The choices

When approaching a cashflow issue there’s really only three approaches:

1. Seek funding to cover the time frame until cash starts flowing again.
2. Re-negotiate with suppliers on terms so that you can defer payment.
3. Sell more, quickly.

Often our approach will be a balance of at least two, maybe all three of these approaches.

It’s the third one we want to address in today’s article, as it is fraught with traps!

The Initial Thinking

The temptation when cash is tight is often to get creative. Creative is not necessarily a bad idea, but over creative is.

H was tempted to bring forward her plans to build an online course as part of her offering. Her thought process, which seems reasonable, was that a lower priced product (rather than her current service offering) would bring in cash more quickly.

As we probed into the drives behind this – it was clear though that this was not a sensible cash injector. Why?

 

  • H had never sold anything online before.
  • She had never created an online course before.
  • She had a small but responsive community of clients who were used to her service offerings.

Ask a better question

When we need a fast result we need to identify the highest impact, easiest solution. “What feels easy?” is a great question in this scenario.

With the pressure of cashflow issues, is something brand new ever going to be easy?

If we are being really honest about it, is a pressured time the right time to employ the patience we need to implement something new? Probably not.

We believe the answer lies in something quite different.

The right answers

The best solution for quick sales:

  • What is your business good at?
  • What comes easily to you as the leader?
  • What are your clients asking for already?

In most cases the answer is something very similar to what you’re already doing right now. It’s the simple and obvious thing.

You may consider the following to get sales in quickly:

  • Run a special offer.
  • Go to current clients and give them a great reason to buy more now.

But the key is: do more of what you’re great at. Not something brand new that no-one on your team knows how to do!

This is not a time to be hedging our bets.

Setting up something new takes a huge investment of time. But even more importantly is the time it takes in getting the team ready for change. It’s ‘mindset’ that is the big time staller. And the mindset comes before implementation every time.

While we are suffering cash flow crunch our head space is already pretty chewed up. It’s not a great time for the extra stress of “new”.

The Solution

After a quick 10 minute mastermind, it was clear the solution for H was to do the very not sexy service work she and her team are used to doing, just with some special offers to get things moving.  That in turn would buy her the time to set up her new creative online venture without the pressure of having to perform immediately.

Being kind to ourselves

It’s easy to be hard on ourselves when we can’t see the simple obvious solution. But it’s a fact of business life that the obvious thing to do is usually obvious to everyone else except us!

It’s for this reason a sounding board is so crucial to every high achieving business owner.  If you need this – join the community. Our intention is simple. To support successful women entrepreneurs to scale and grow their businesses, with the support of a global brains and heart trust second to none.

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