Chronic Cash Flow
By Blaine Bertsch
In "Chronic Cash Flow," Blaine Bertsch explores the complexities of managing cash flow in today's unpredictable business environment. This essential guide offers practical strategies and actionable insights to help business owners navigate cash flow challenges with ease. From understanding the root causes of cash flow issues to implementing effective solutions, Blaine provides a comprehensive roadmap to ensure your business thrives.
Learn how to:
- Diagnose and address chronic cash flow problems
- Implement robust cash flow forecasting techniques
- Develop effective scenario modeling to anticipate financial challenges
- Optimize working capital and enhance financial stability
- Drive strategic decision-making with real-time financial data
I wrote Chronic Cash Flow to share what I learned from running a business for over two decades and know the pain of cash flow all to well. – Blaine Bertsch
Excerpt
Preface
Here I was…staring at a blank spreadsheet. No clue where to start. But I knew if I didn’t get started, my business would fail. It was 2009 and the global recession was working its way
into our business. It wasn’t just on the news anymore. Client budgets were slamming shut on all sides, projects were canceled mid-stream, and to make it worse, we’d just expanded our team, moved to a bigger office and leased fancy new sports cars.
Brilliant move.
I’ll be honest with you. I’m not sure I even knew the term ‘cash flow’. But I knew the concept. I’d made the lonely walk to the mailbox pleading that a check had rolled in to save us. Meanwhile, we’d dumped personal funds into the business accounts to keep us afloat.
How did we get here? How did I not see this coming?
What a mess.
I started my first business in 1999. At that point, it was just me. Somehow, over the years things just kept getting a little bigger. Projects got bigger, the team grew larger, and expenses grew at a feverish pitch. Somehow, it didn’t feel like the profit matched the growing risk but I really didn’t pay that much attention.
The years leading up to 2009 were a different story. It always felt like new business and repeat clients were walking in the door. We were constantly on ‘trade trips’ and going to conferences.
We were trying to uncover the ‘next big thing’ for our business. Honestly, it just feels bizarre to me today. NewYork, Austin, Hong Kong, Shanghai… Fun but not necessarily profitable. So, back to 2009: I’m sitting in my oversized office, staring at a spreadsheet. What did I know about spreadsheets? A thousand little boxes filled my screen and somehow this was going to help me figure things out.
Now what? Well, top of my mind, can we make payroll on Friday? I guess I’ll just work backward from that point and figure it out. I gathered up contracts, invoices, bills, payroll statements… whatever I could gather. Pretty much everything was still paper in those days, sitting in binders and folders scattered throughout the office. How much DID it cost to stay in business every month? Budget time. I think I had a decent tally but I needed something with some structure. I needed more detail and data that looked forward into the coming weeks and months. It was too
late to change yesterday. We were down to nickels and dimes so a ‘rough guess’ wasn’t going to cut it.
A little digging while learning the ins and outs of spreadsheet usage and I had built a budget. I knew where our break-even point was, at least with the regular monthly costs. Now I needed to figure out what bills were sitting on my desk along with the ones that would roll in over the next little while that weren’t “the usual.” The tax bill, invoices from contractors and suppliers, the hard drive desperately needed for the editing suite. I added them all to the list. This was going to get
messy.
But once I had a handle on the next month or two’s expenses, I could finally figure out if we would have enough income to cover everything. I dug out our invoices and went to work. First of all, I just listed the invoices and grabbed a total. Well, that was a waste of time. If I didn’t know when the money would show up in our mailbox, get deposited into the account… then wait on the bank to grant us access to our funds, I’d be out of luck.
That’s when reality hit me. The numbers were only half the story. The other, even more important part, was the timing. Would the invoice be paid, cash in the bank, before the bills and expenses needed to be dealt with? I need another spreadsheet. (Well that was something I didn’t
think I’d ever say.) This one was all about the timing of the payments. I guess I could have just tried to add more and more data to the first sheet but it was already massive. I needed to simplify things. Stand back, look at where we were at and make some decisions. I needed it to be simple and clear.
Over the weeks and months, I went from dreading the process to getting addicted to data. Soon, I had spreadsheets all over the place. Not only did I build a system for tracking our cash flow, I even built a sales projection that had all of our potential deals and when I thought they could turn into money. I deals and when I thought they could turn into money. I explored our profit margins and staff efficiency. I began to uncover the truth behind our business. Finally, I was working on my business rather than in my business. By this point, we were closing in on 2011 when I made a realization. We were leaving a ton of cash on the table that should be powering our growth. And we’d left even more on the table in the first few years of business with our ‘fly-by the- seat-of-our-pants’ methodology.
There truly was gold in the numbers.