How To Manage Your Cashflow – Small Business Show 185

The Small business show episode 185 for Wednesday, August 22, 2018. Greetings, folks and welcome to the Small Business show here at BusinessShow Co, the show that is by, for and about small business. Sponsors for this episode include gusto, where@gusto.com SPS you can get a free three month trial of their benefits, payroll and HR service and Textexpander. We're@textexpander.com podcast to get 20% off your first year. We'll talk more about that in a minute. Here in Durham, New Hampshire, I'm Dave Hamilton.

And I'm Shannon Jean. I'm excited to be here today, Dave.

I am too. Yeah. Yeah. It's crazy. The summer is coming to an end, right?

It is.

Our kids are going off to school. I think your kid, your daughter already left, right?

My daughter left on yesterday. Well, a couple days ago. And then my son's been back into high school for.

Oh, that's right. You guys start early out there.

Yeah, yeah, about a week or so. So it's come. It's kind of getting back into the routine, so to speak.

My daughter leaves for the first time on Friday for her freshman year. So that's not going to be an easy.

Yeah, that's rough. It is rough. Yeah, but that's great. Yeah.

I always say that's a good thing like, you know, because it means that we actually enjoy other and we're not. Nobody's looking to get out, you know, so that's a good thing. But that makes, it just makes those particular moments suck a little bit extra. But that's a good thing. It's a good outcome. Yep.

Yeah, I agree. I agree. Hey, I want to talk. One things I really love when you open the show is the, the that tagline by, for and about small business. And, and the thing about, or one of the things I love about it is we are, you and I, Dave, engrossed in, you know, this small business culture all the time. It's not like we're, you know, we ran a bunch of business, now we're done and we sit and talk about it. But you know, we talk about our businesses. We always do a pre show discussion, how things are going with your company here, company A, company B, you know, and, and I, I love that about it. And as we're, you know, learning, making our mistakes, looking at new opportunities, you know, we share that here on the show. So it's, you're getting real world and real time.

Yeah.

Advice from us and it's exciting. I Mean, I mentioned to you last week, Dave, you know, I' involved in a new software venture that has got me, you know, awake at night thinking of new ideas, which I love, you know, doing.

I love that. Yes. Yeah, yeah.

It's totally cool. The fun part of the business. Oh, got to come up with a name. We got to come up with the website, got to come with the logo. I mean, I love that stuff, right?

Yep.

Yeah, yeah. And so I'll be sharing that as we go along and, you know, during the, during the coming months and, you know, just some information on that.

A cool.

A critically important part of all of our small business, and that's cash. We've talked about it here a bunch of times, but it's worth revisiting again because there are a lot of companies that even though they may be very profitable, they run out of cash and they wind up in the dustbin and close. So we're going to spend the next half hour or so talking about that.

Yeah. Yeah, let's do it. It is the most important thing. And I will say this. You know, if you're, if you've been running, you know, businesses for 10, 15 years, it's easy to say, oh, I don't need this episode. Right. I already know this lesson. Well, I have thought that way in the past, and I've caught. I've gotten caught that way in the past. When you get too comfortable and you stop worrying about cash, you can run into a problem real fast without realizing that you're heading there. So, yeah, definitely it is that, you know, you said you just started something new, but that, that's a great reminder that you have to stay focused on the cash flow and, and, and you'll do it in all your, you know, sort of, you know, more mature businesses, too, perhaps a little. I don't know if, if you take your eye off the ball all that often, but, you know, if, if you do, like, it's a good reminder. Oh, yeah, yeah, yeah. No, you got to just. You gotta be there 100% of the time. Yeah, yeah.

And one of the issues I have, and I still have to this day is I often fall in love with the, the P and L, the profit and loss loss statement and that it's great because it kind of gives you one measurement of your. Of your business, but you also need to fall in love with your cash balance and your, you know, cash flow statement, because at any time, you need to know what's going on with your cash.

So I have a tip for you, and it's something that I taught my. I had to, I had to force myself to do. And I started this not that long ago, probably, certainly after we started the show, maybe, maybe three years ago or something. I, uh, I don't let. If I go in to our accounting package or whatever, and the first thing I want to do is look at the P and L. Right. Because like you said, you can fall in love with that. It's so easy and it makes life. Makes life look rosy. And you can. The thing is, you can manipulate it to make life look rosy.

Yeah.

Yeah. So I am not allowed. I do not allow myself to look at the P and L until I've looked at a cash flow report, a cash flow forecast, and logged into the bank and looked at the balance that's right there. Then and only then do I allow myself to pull up the P and.

L. Yeah, that is a huge. I mean, that's a great bit of advice because what I find is I'm looking at the P and L to see how good I can feel about how things are going. And that's important. Yes, it is. But that looking at your cash balance and the cash flow statement is a great place to start to where, you know, okay, I can. Now I can move beyond that. Because if you can't move beyond the cash flow in your, you know, you're. You're in a cash crunch, you just stop. Because it doesn't matter how much you say your, Your profits are, you, you're. You're having another problem altogether.

You've got a different. And, and, and there have been times, thankfully they don't happen often these days. But certainly there are times where I like, oh, I want to look at the P and L. Oh, gotta follow my. Gotta be, you know, diligent here. And I go do my things and I'll be looking at cash and suddenly, you know, a couple of hours have gone by and I haven't pulled up the P and L because I'll look at the cash and realize, oh, crap, we gotta, like, we gotta shuffle some things around here. We work and you solve the problem that you had versus just looking at the thing that makes you feel good inside.

Yeah. And I have this down in a further section of my notes, but I think it's a good time to mention it. Most modern accounting packages, Whether you're using QuickBooks or Account Edge or something more sophisticated, Dynamics or something, they'll kick out this data for you and produce this statement of cash flows whenever you need it. However, if you're not keeping up to date with the data that you're putting into the accounting software, it's not going to be very helpful because the software needs this data to see what's going on, to give you that projection and tell you what's going on and what the cash flow looks like. So you want to keep up to date. And I've had this problem before. I use lots of different databases and FileMaker and you're doing stuff.

Yeah.

And you have to make sure those imports, like waiting a month to do imports of data if you're selling like, you know, I've always sold in marketplaces and then our website and all these different things. So you have to combine a lot of sales data. But if you wait a month, well, you're going to be a month behind. So, you know, you need to move, or I would suggest moving to like a weekly import of data or some sort of automation that can get it even in there faster for you. Whatever works. So I think that's a real important thing to point out.

Yep, yep, for sure. For sure. And, and you can. You mentioned FileMaker and QuickBooks. Officially, QuickBooks has no import functionality, but, but all those IIF files that you could have generated years ago, it still definitely supports all of those. And you can, it's, it's relatively easy to generate those with FileMakers. So if you, if you are keeping things in FileMaker, you can certainly spit those out in a format that QuickBooks can slurp right in. We do that all the time. And it's great. Yeah, it's great. Yeah, yeah, yeah, yeah, yeah.

And I use Account Edge just because that's what I've used for a long, long time. Used to use QuickBooks, but accountage really is. It sets up imports really well, just texture, not CSV files. And we dump tons of data and it's relatively straightforward and we've automated a lot of it with scripting and that kind of stuff. So that's definitely worth studying and looking at improving. Because the sooner you're going to get that data, you're going to have a more accurate picture, your inflow and outflow. And before we go any further, I want to make it clear here, okay. What's more important, profit or cash? Well, at this stage of the game, cash is more important because without it, you're nothing. And plenty of profitable businesses have shut down for lack of working capital.

The way I like to look at it is profit. Your P and L, but really your profits are important to other people. Cash is important to you.

Yeah, I like it.

Right. Because the banks, when you're going to get a loan or whatever, they want to see your P. Ls. If somebody's going to acquire your business, they want to see your P Ls, you know, and, and that makes sense because you can see the overall sort of big picture health of things. But everybody knows when you're looking at that, that you can make those look rosy. The cash flow, cash doesn't lie, that you either have it or you don't. Yep.

Yeah. And I, and I think if you're, if you're monitoring your cash and you see that cash flow is healthy and you've got enough working capital to keep, you know, getting everything paid, the profits are going to follow because that's what's generating, you know, your inflow and then your outflow. So just keep, keep your eyes on that thing. So I think that really important, you know, what's going on with your cash each day, if or by, you know, weekly at a minimum. You need to know what's, what's going. And so let's roll in, you know, positive cash flow, what's coming in the door, paid for by sales. But the thing to make, one thing to keep in mind is if you're giving out net terms, that's really going to impact your cash flow in a negative way. And it's a very common thing to do it, but because you have to with so many different kinds of customers. But I would say you also need to be focused on matching your receivable terms that you're giving to your customers with your payable terms that you're paying to your suppliers. And I've always had this problem because most of my suppliers, because I've been an inventory guy most of my life, they want the money up front. They're not going to give you terms because there's somebody right behind you willing to pay cash. So it's a wire transfer out and then you have all this product coming in the door that some of it's going to get paid for right away when you sell it. Some of it's going to be paid for on net terms. So it's really going to dramatically impact your cash flow. And for us also buying lots of consumer electronics product that had to be refurbished that further would slow things down and it would be your work in progress. How much cash is tied up in your work in progress. Can you walk out in your inventory and say, wow, you know, there's 100 or whatever, $25,000 worth of product Sitting here that I can't sell because it has not been prepared to sell yet. That's one thing that can really impact you, and that's something that you can control. If you have all this cash sitting there, you can shift your, your workforce over there to get through that quickly so you can, you know, increase your, your cash flow for sure.

Yeah, yeah, yeah, yeah, yeah, yeah, yeah.

And, and then, you know, negative cash flow. What's your outflows like? Say, what are you, what are you spending on that, you know, what does it cost employees there each day? How much cash are you spending on your inventory? What are your accounts receivables look like the work in progress that I mentioned? And your expenses, you know, what's your rent, utilities? And right here I want to take a little break and mention one of the things that can really impact your cash flow is avoiding shiny things. And I tell this from experience, you should be buying furniture from the company that's going, going out of business, not from a furniture store. You should be buying, you know, technology that's maybe one generation behind or maybe even two.

Yeah. Resist the urge, especially as you start making a little bit of money, resist the urge to, to go from. You are a creator, right? As you're, I mean, you started a business, you're in some way, you are creating something. You're either creating wealth for people, you're creating jobs. Be careful to always stay a creator. And just because a little bit of money comes in, don't quickly become a consumer. Right. You know, and I mean, there's, you know, this isn't a binary thing. Right? It's, there's a, there's a continuum between creator and consumer because you need to do some consuming in order to create. But make sure you're always leaning on the side of being a creator, which means thinking creatively. Right. And like you said, buying the stuff secondhand or, you know, like buying computers that, that are refurbed or whatever, like these things are. Okay. Especially nowadays, you know, man, it makes such a difference. Really huge difference. Yeah. That can, that alone can be your profit margin right there.

Yeah, absolutely.

Right there.

Yeah, yeah. And you know, just remember, you know, Amazon, you know, they're used, they're using. I still think they're using, you know, doors, old doors for desks, you know, up on, you know, so horses or whatever.

Yeah.

So, you know, that's, that's the mentality you need to have, you need to, to know. And it's kind of like lifestyle creep, you know, where if you start making More money, You buy a bigger house, you buy a better car, and all of a sudden, you're. You're beholden to all this stuff. Well, you can do the same thing in your business. So don't do that. You know, just stop. Just stop. Just stop right there and. And don't buy it. Maybe, you know, sometimes it does pay to lease equipment. There's a lot of tax benefits to that, you know, but. But think about it. You know, what can you get by? Look great. You know, some things, obviously, you have to buy, you know, and prepare. You got to look professional, of course. But there's a lot of stuff in your business that I would. I would suggest you can really save some money on.

You can do it on the cheap and nobody knows. Yeah, yeah.

And get your employees thinking like that, too. The last thing you want, you know, is employees. Oh, we're. We're fat. You know, we can go buy this. I. I need. I don't know. I can't tell you how many auctions I've been to where this company ran out of cash, and Everybody's sitting on $1,000 chair, you know, on a Herman Miller Aaron chair, which I happen to be sitting on right now as I'm recording. But I think I paid, like, 200 bucks for mine at one of those auctions. And the auction circuit that I traveled around on for, you know, years and years and years really taught me that. It's like, wow, look at these. This is a huge company. They made the same mistake, and they make it over and over and over again. Save your cash.

Yep. For sure. For sure. Yeah. Yeah. It's the only way. That said, and I will use this as a segue to talk about our two sponsors today. But that said, sometimes there are some things that are well worth you spending your cash on. And with that, I'd like to talk about our first sponsor, which is Gusto. Gusto. Man, this is such a cool service, right? You know, payroll and benefits are hard. These are, you know, cash outflows, and you want to manage them very carefully when you're. Especially when you're a small business. But you don't have time to be an expert in things like taxes and regulations and all the old school payroll providers start built for the way you work today. Right. Gusto is making payroll, benefits, and HR super, super easy for the small business. Modern technology does all the heavy lifting, so it's easy for you to get it right. You don't have to be a big company to get great technology, great benefits, and Great service for your team, right? PC Mag and Fit Small Business have called Gusto the best payroll for small business. And they say 9 out of 10 users say Gusto is easier to use than other payroll solutions. You gotta check this out. Okay, so here's how it works, because you really don't want to have to hire an HR expert, right? This is what you contract with Gusto for, and you can do it and get three months free. So to help support this show, here's a special link to use that gets you that three months free and lets you lets them know we sent you. Gusto's offering this deal. It's a exclusive, limited time deal. Sign up today and you'll get three months free. Once you run your first payroll, just go to Gusto.com SBS again, that's Gusto.com SBS to get your three months free. Our thanks to Gusto for sponsoring this episode. Another service that's totally invaluable is Textexpander. And if you visit textexpander.com podcast, you'll get 20% off your first year of this piece of software that helps you communicate smarter. You can create snippets for the things you type or think about all those things you copy and paste. How many times have you gone in? Just yesterday, I wasn't using textexpander. I sent an email out to somebody. I had a great idea about bringing on a new partner. And by the way, it worked. And I sent this email and then I thought, you know what? This other company would be great at partnering with us in exactly the same way. So what did I do? I went into my email and I didn't even copy paste. I said send again. And I meticulously went through the email, changed the names, changed some of the text because it was going to be the way we were going to work together. And I hit send. Guess what? I didn't change the to address. Yeah, textexpander would have saved my butt. Now, thankfully, the embarrassment was worth it, but it's not always worth it. So use textexpander. Trust me on this. I have it. Like, there was no excuse for me not to do this because I'm going to send this same thing out a couple more times. I definitely. It's like it costs nothing. It's like, it's like 10, maybe, maybe it's two seconds to add this as a snippet to the time that it costs to add a snippet is nothing. So you got to check this out. Visit textexpander.com podcast for 20% off your first year. Create your snippets. That way you're not copying and pasting and you ridding yourself of the opportunities for terrible embarrassment. Let me be a lesson to all of you.

Cautionary tale.

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All right, man, that's good stuff. Yeah, that's awesome.

Sucked, man. Oh, and I knew it. Like, Like, I. I don't know, I went back into my outbox five minutes later and it was like, oh, okay, well, now I get to send this guy a third email that starts with, well, now this is embarrassing.

Yeah, yeah, that's great. That's very funny. Yeah.

Kind of.

Yeah. Funnier for you than for me. Well, funny now, right?

Yeah, funny now. Yeah. Yeah, it actually all worked out. But, you know, sometimes embarrassment, you know, it shows. It shows humility. It shows humanity, and that actually can work out. Yeah. I won't let that particular mistake happen again, even though it did work. But, you know, there's a benefit there, so.

Yeah, that's cool. So we've talked about cash flow, the importance positive, negative cash flow, this kind of stuff. And inevitably and, well, you know, no doubt everyone listening is much smarter than I am. But even that being said, you're going to hit a point where you're going to be in a cash crunch if your business is growing. Especially growth is very expensive and tough to keep up with. Sometimes it's like having a tiger by the tail because you're just focused on growth and ramping things up. And you can easily take your eye off your cash balance. So you need some stuff to help you bridge the gap when cash is in trouble. And I'll never forget when I was just getting started in the Apple business and didn't have access to much money, and I met a guy and he's like, hey, come out. Come to one of these auctions. And I remember flying out there and I was like, man, I just, you know, I don't have. I just don't have access to capital. This is a great deal. What do I do? And this guy, you know, he pulled out a stack.

Like, wait, say that. Say that again. He pulled out a stack of. A stack of what? You. You. You cut out your. We're going to get that Ethernet cable for you before next week.

We are? Yeah, yeah, that's right. It'll be next time. He pulled out a stack of credit cards and it was like, you know, 2 inches thick or maybe a little more. And he's like, here, you know, this is $400,000. Let how to do this. And I was like, oh. Because I had, you know, not much back then. A bank would just laugh at me. They wouldn't do anything. So, you know, using credit cards to help you through short term cash crunch or you know, stuff is, is a great thing to do and also can help, you know, towards establishing your charmed life, which we've talked about here on the show a lot with the points and affinity cards, that kind of stuff. But that, that can definitely help you. You know, the other thing you need to do is if you're, if you have an inventory, you need to look at your products and say, what's sitting here? What's been here for a while? What do I need to get rid of and dump to generate cash? And again and focus so much around the P and L. If it's been sitting there and you can't move it, move it out. And don't worry about the loss on your books as much as the positive impact that's going to have on your cash flow, because that's what you're really looking for. If you have stuff you paid 100 bucks for and it's only worth 75 bucks now, well, it's not going to increase in value past that 100 doll bucks in anytime soon. So take the hit and move on and, and you know, live, live on that cash.

Yeah, I would say, I would say adding to your dump the junk theme here is accept the concept of a sunk cost. Right?

Yes.

You've already spent the hundred bucks, so it's not like you're spending that again to sell it for 75. That 100 is gone. Do you want 75 or do you want 0? That's the question you ask yourself. That's it. That's the only question.

Yeah. And if you, yeah. And you know, if you hold onto that product another few months or six months, maybe it's only worth 50 bucks, not 75. So, you know, you have to look at that stuff differently. And especially in an inventory business, it is a very good way to raise quick cash and also to use as marketing, you know, and get people's attention just like, wow, they're really blowing this stuff out. You're going to get new customers that'll lead to other sales down the road. So, so I think that's a, it's a real important thing.

And I would say, you know, you're talking about an Inventory business. And I would, I would have. If you asked me, do you run an inventory business? I would say, no, I never have. I don't. You know, there's, there's. I mean, there's benefits obviously, to doing this, but, you know, there's also pitfalls because you're sitting on inventory. However, I absolutely run an inventory business. We sell ads. These are expiring pieces of inventory. Right. If we didn't sell it and the podcast went out or the web, the webpage got loaded, guess what? It was free. So, you know, when, when we have inventory, you know, shortfalls or whatever, where we. Or sales shortfalls that leave us with lots of extra inventory, we do the same kind of thing. It's like, all right, cool, we'll put together a deal. If you're willing to buy X number worth, we'll give you, you know, whatever. We'll. We'll give it to you. Maybe not. We won't say it's half price. We'll say we'll give you six for the price of three. But you gotta sign by the end of the week because we need next week's inventory full. And I'm willing to take a little bit from the future because that's all I have to back that up. Now. We don't do that all the time. Otherwise that would just become the price. And that's the other thing to look at. Right. Is if you're constantly having to special off all of whatever you are selling, you have a new price, there is a new normal, and your customers already know it. So just accept it and put it out there so that you can have the opportunity to special it out in the future at a thing that truly is a special price. Yeah.

And maybe it's. You're. You're only making it available to certain customers. Maybe it's kind of an, you know, not. You're not promoting it very much and you're just putting. Yeah. So you're, you're not getting known as the blowout king or whatever and, you know, lowering your, you know, price point. And also that bundling of, hey, we're running a promo. If you buy three, do whatever you get, you know, buy one, get one free, whatever it is, instead of having that perceived thing like, oh, well, this is all it's worth now. So there's ways to manipulate it. But in my experience, the hardest thing to get over is that thing in your head telling you, I spent a hundred bucks for those, I need to sell them for 120 or 125. That's irrelevant. You know, everything long term.

Long term, yes, you do need to do that, but. Oh, yeah, yeah, but specifics, no. You just gotta sell it for what it's worth.

That's right. And I always make the comment, you know, we always make our money on our buying what we bought. Everything will sell, everything sells. It's just a matter of at what price. And so you need to move that product out. It's a great opportunity to generate cash. The other way to kind of keep your cash is to slow down paying your accounts payable, you know, and to really look at who must get paid. And, you know, there have been many times where I would do weekly cash meetings with, you know, my team and managers and say, okay, guys, or my accounting. And who has to get paid because we're tight this week? And who can we push out? Can you push out? You know, AT&T, are they going to shut our phones off this week? No. If we push out, you know, the. I mean, are they going to keep the electricity on? No, we got to pay that. You know, this kind of stuff, really analyzing your bills and having a meeting and really adjusting. Okay, who are we going to sell this? Even when things are good, that exercise can really help you and introduce a good structure and discipline in paying your bills, I think is a really. That's a great way to save your cash.

I will say this sort of as the counterpoint. I mean, I do that too. I think you have to. Sometimes you have to. And like you said, at all times, it's not necessarily a bad practice. But if you find yourself in that scenario where it is, you know, an emergency sort of thing, where you're saying, we have to do this, think of, make sure you're also coming up with the solution. Because kicking every can down the road is, Will eventually result in an insurmountable amount of debt that your business clearly cannot overcome. Right. And you need to be careful of that. So sometimes it's okay, we can kick these, these cans down the road, we can get to positive cash flow, but those are coming due. And what can we cut out? Not just kick down the road. So you got to pay electricity, you got to pay your phone bill, but is there some recurring expense that you can cut long term, forever or for a while in order to buy yourself that positive cash flow in the future? And that. Yeah, it's never an easy decision to make. Right, because, you know, you've, you, you've been frugal and you've signed up for these things and Hired the people that you need to hire and all that stuff. And then sometimes it's like, well, something's got to go.

Yeah. And things have, things happen. You know, I could, I could tell you the story, you know, where I had a customer do a chargeback on a $75,000 credit card purchase. That, that's. I, I would tell you, but it's still, I'm, I'm still a little shell shocked from it because you have to scramble immediately because all of what you thought you had in the bank, you know, is sucked out. And then you've got to, okay, now what do I do? And you can have that conversation with your people you owe money to. Hey, I just had a customer, pulled this crazy thing, it's never happened before. And they'll, you know, oh, okay, I understand that. How much time you need? So communication, maybe another thing, communicating with your vendors, suppliers about money, your bank, all that kind of stuff. Very, very important. Especially on those short term things.

Yeah, yeah, it's good to have a. Communicating with your vendors is especially important when you are in one of those scenarios when you cannot pay them when they're expecting to be paid. But in order to make that work, you need to communicate with your vendors at all times and not just when it's.

Not just when it's bad.

Yeah. So they're like, oh, hey, it's Dave, or hey, it's Shannon, you know, oh, he only calls when he needs to not pay me. Awesome. You know, you don't want that rep. So.

Yeah, well, and I think that goes to the concept of treating your vendors like they're your customers. And we've talked about that on the show. I've mentioned it a bunch of times. Because if you have that good relationship with them, then when things do go wrong, they're going to give you a little bit more leeway. So it's really worth your time, you know, on the long term for cash flow things. You know, lines of credit are fantastic and really can help you manage when the cash. Cash gets tight, but it's important. Just like Dave was saying about not getting in too deep. You need to be able to pay that money back to that line of credit. If you just keep sucking it out, you're going to wind up in the hole too much. Whether it's a bank line of credit, whether you have a PayPal, working capital loan, other small business loans, that cash has to go in and out. So if you can't pay it back, it's symptomatic of there's something else that's wrong.

Yeah, it's a nice rip cord to be able to pull.

Oh, yeah.

You know, in that moment when you need it. But I've always, I mean, there have been times when I've intentionally used the line of credit maybe to build up some credit history or whatever. And it's like, okay, we're just gonna do this. And yeah, it's stupid. We'll pay a little bit of interest, but long term, it's worth it. We have the cash flow. You know, we didn't need to, but we did it anyway. And then there's those times where it's like, oh, holy crap, we need to use. Like there's the line of credit. Thank goodness it's there. Thank goodness. And here's the tip, right? We went and got it when times were good. Because the bank's probably not going to give you a line of credit the day you actually need to use it. But when you pull that rip cord, you know, I know that it's the same kind of thing. I was just saying you need to come up with the long term solution. Like, it's good that you have this, but something else needs to hurt if you're going to, if you're going to do this because it's. You can't just take this as the easy way out and then think, oh, great, problems are solved because they're not solved.

Right. Well. And one of the things you can do with the line of credit, if you notice it, that it's just kind of built up or it hovers. Let's say you have a, whatever $100,000 line of credit and you can't quite get it paid down past 75 grand. You know, just kind of. We're just kind of stagnant. We're not, you know, we don't generate enough cash. Talk to your banker because oftentimes what they'll do is allow you to take that 75 grand and they call it terming it out so you can convert it to a term loan and say, look, I'll pay the 75 back three years at a lower interest rate and you just make monthly payments automatic. You know, they're going to come out, it's going to impact your cash flow again, but it brings discipline and gets you to pay that. The thing to be careful of is then you can't go back. It's going to free up that 75 grand. Don't jump right back in and borrow up to that. You're going to wind up in this vicious Cycle. So there's ways to help you add some discipline, because as you can tell, I'm not the most disciplined person in the world. And I have used this method a number of times to force me to get those credit lines paid down. Which has worked out well, huh?

I've never, I've never done that. I, I've never let myself get in that scenario. And I, I don't say that judgmentally about anyone other than me. Like, there, there it. Looking back, there are times where it's like, you know what? If I had taken on extra debt, I could have grown things faster. Like you said, growth is expensive. And I may be in a better position today than I was, you know, than I am, because I, I took on that risk and, but that's an interesting thing. I've never been in the scenario. I didn't even. I mean, I suppose if I.

Works pretty good.

Yeah. Terming it out makes perfect sense. I mean, the bank's going to do whatever they can do to get that money back. Yeah.

Well, and they're, you know, the bank is looking for an overall percentage relationship with you. You know, they want as much as they can get at a certain percentage. So if you'd say to them, hey, how about we term this out over three years, five years, whatever, whatever they'll do, depending upon how you handle it, you can, it can add to your basket of business that you're bringing to them, which, you know, when you want to increase your line of credit, if you're doing, especially in, again, in the inventory business, we always need, hey, I have this great opportunity, but I need X and I don't have it. You want to get and do this deal with me and that kind of stuff, but the, the overall thing here, I, I think one kind of overreaching concept is to have good cash flow. You need to measure all this stuff, everything. You know, what, what's going on with your payments, what's going on with your receivables? What's going on? How fast is your inventory turning? You know, how fat?

Yeah.

How fast are the customers paying their bills? If you don't track this stuff, there's no way you're going to know anything. You're going to go off your gut, which is not always right when it, especially when it comes to this accounting stuff. I, I can tell you from experience it's not always right. And like your employees, what are your employee expenses all the time? Are you just at the edge where you're paying overtime because you don't quite have enough work for a new employee, but your existing employees are each doing a little bit of overtime to pick up. I love to be right there. Because then you're like, well, I'm not adding a new employee and all those expenses and overhead, that's with it. And everybody else is getting a little overtime. They can make a little bit of money, but eventually that over time is going to exceed the cost of adding another employee. When that happens, when that happens, hire another employee and then, you know, peak up. If you're growing and hit that ceiling again and just measure everything and you have to take the time to study this stuff. And I am the worst at it because I'm always thinking, oh, action, action. That's how I make my money. You know, I'm doing this, I'm doing that. But just sitting down and looking through this stuff and asking questions and getting help from your bookkeeper or accountant and looking, looking at that is going to teach you and help you with your cash flow, which is going to keep things healthy. Profits will follow as you're bringing in that cash. It's, it's going to happen for you.

Yeah, yeah, yeah. No, it, you know, I forget who it was. It wasn't me that said it, but I have to remind myself to live by this. That which is measured is managed. And it's true. Right. You know, as long as you measure this stuff, you will wind up managing it. You're aware of it. You know, just the, the act of intentionally going and looking at how this stuff happens means now it's there. It's a thing. As opposed to, like you said, it's easy to just, well, whatever, you know what, it's the end of the month, we still have some money. That's great. Let's do it again. That works. I mean, it can work. I'm raising my hand. I'm a testament to that at times. But it's not going to help you grow. It's not going to put you in the position you need to be in. So, yeah, yeah, that's great.

Yeah. So, you know, we'd love your feedback, your questions. Tell us, you know, how you manage your cash. Tell us what we got wrong, what we got right. Feedbackusinessshow Co. Or come talk. In the small business support group at BusinessShow Co Facebook, there's three or four hundred other business owners in that group that would love your feedback and love to answer your questions. And thanks for being with us today, folks.

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