Cash Flow Chaos: How to Fix the #1 Small Business Killer

So running a business is like walking a tightrope, and cash flow is your balance bar. That is the parable that we are starting this with.

Yes. One misstep and it's a long way down.

It's a very. It's a very long way down.

No net.

No. None. None. None. So I think there's some financial stuff going on right now, and it doesn't really matter when you're listening to this, there's going to be financial stuff going on. So this week, let's talk cash flow.

She's the CEO, he's the marketing and operations guy.

If it's broken, you need the business fix. We're talking cash flow this week.

Yes.

Before we get into that, let's talk crash flow. I believe it's not nice. I believe a Starbucks customer decided that you guys needed drive thru HR service.

We did. Yes. And he drove through Starbucks parking lot, promptly launched himself up the hill into our building like the Dukes of Hazzard. Did a great job. Wow.

Yeah, that's. I mean, you said he's okay. Gonna be a little sore.

He's fine. He was in a car that was, you know, structurally sound engineered. Well.

Cause I thought I should ask what's exciting this week. And when you. When you texted me those pictures, I thought, I don't know if I need to ask the question. I think that's just got to be it. If there's something more exciting, I don't know if I want to hear about it.

No. If there was another reason for me not to want to be in our corporate records room where all our tax stuff is filed, it would be now because there was a car in it. So.

Yikes.

Yeah. Fun times. He says he has insurance. We'll see. I know we do.

So he does that fine.

In case you ever wondered how they board up a building, how they fix things, you know, I learned yesterday it was fun.

No, thanks. No, thanks.

It's another thing that adds to.

Yeah.

Cash flow. So barring my lovely time with the Selma County Sheriff's Department, the Coventry Fire Department at all, because you know where we are, everybody responds. What's going on in your life? That's exciting.

Mine's a little more calm.

Okay, good.

Yeah, no, gonna. We're gonna.

We're.

We're gonna go ahead and bring this down a notch. I actually did. I used Facebook Marketplace successfully the other day.

And you did not get human trafficked or murdered. Good job.

Yeah, no, that was kind of it. I traded one of my motorcycles. Yeah. Yeah, I. I mean, Guy wanted what I had, I wanted what he had. I'm like, hey, mine's worth a hair more. Couple of hundred bucks. We signed titles over yesterday. It was a nice day. I rode out there on my bike, switched license plates, switched titles and rode home. So, yeah, that means I'm going to work very late into the night tonight. Figuring out cash flow because there's, there's something that happened cash flow wise for us that I know we're going to talk about here in a bit. Getting into the cash flow piece.

Sure.

I always like to talk about this because whenever you're at a network, cash flow is such a key part of business.

Yes. That we don't want to talk about.

Right. No one ever wants to talk about it. My, my parable to this is, yeah, business is great. I don't know if I can make payroll this week, but business is awesome. And the problem is, is in a lot of cases, people are in that situation. The revenue is coming in, they, the, the good stuff is coming in, but they, they, they got no cash. So I want to talk common pitfalls.

Okay.

Like you said, like management. What are some of the other, like, things that we'll touch on?

Forgetting the need for reserves, dealing with client loss, or your customers lengthening their pay cycle for invoices. You know, what to pay, what not to pay.

Oh, that's a tough one.

The three things you never should ever default on because they can land you into hot water really quickly, especially if you have employees. Those ones, yeah. When, when the legal gets litigious and then you wind up in receivership, there's all sorts of like, we could go down a rabbit hole.

Yeah, we could. We're going to. We're planning on it. We're planning on it. We've got plenty of time today. This is going to be good. From the CEO side of that, why is effective cash flow management, why is it so critical? I mean, for not just short term, but the long term Success.

Yeah. So there's a few things. I mean, first is you can't grow if you don't have the oxygen. So cash is oxygen for your business. You kind of hear that in a lot of organizations. So if you don't have enough oxygen, then you're going to suffocate so you can deal with the. It's very similar, you know, we need cash, we need air.

Yeah, yeah.

At the same time, growth, it can stagnate your growth if you wind up in a cash crunch. I mean, you can be doing everything right. Have an amazing product. But if you can't pay your bills, someone else is probably going to own you and it's not a good way to end. So. No, yeah, I mean, it's critical. It's critical for growth, it's critical for function, it's critical for maintaining status quo, ensuring that your employees are happy, healthy, whole and able to do the work that they need to do. It's really important that you pay them.

Oh, it's interesting you say that because years ago, and this is dating me and my neighbor who has since passed, that should tell you even more. He said there are three things that you never mess with at work. And he goes, one, employee's car, two, an employee's lunch, three, an employee's paycheck. And he goes, all three of those are the same thing?

Yes.

And I was like, oh, yeah, yeah. Because employees tend to not like it if you can't pay them.

Yeah, they get a little mad. And then the federal, Federal government gets even matter.

So I mean, what are some of the dangers, like, of overspending or poor expense management that you've seen? I mean, you, from your guys's perspective at Clarity hr, you get, you get to look under the hood.

We do.

What are some of the dangers that you see? Because I'm assuming, I mean, from other businesses that I've been involved with and seen. Anytime there's a problem like this, it's typically one of like the same things.

On an HR side. Oftentimes with cash flow, what winds up is we'll, we'll get a call or a thought of, hey, cash is tight. I don't think we're going to pay our employees this week. We're like, wait, time out. That's the one thing you have to pay. You have to always pay your payroll when it's due. You have to always pay anything that you're taking out of an employee's paycheck. So any type of like 401k deductions, health insurance, anything. Answer. You always have to pay those things for your employee. The other thing is taxes are important. That said, you cannot pay your taxes and the government won't shut you down immediately. You don't pay your payroll, you can wind up in hot water really fast. You can wind up in receivership really fast. So that's one of the primary questions we get is, hey, we're not going to make payroll this week. What do we do? And we're like, you need to make it or you need to notify your employees and have the date that you're going to make it. Because occasionally things happen. People forget to fund payroll. They accidentally forget to move money from one account to another. Sometimes the payroll clerk gets sick, and they forget to push payroll. I mean that once in a while. Like, once ever on the planet in your business life. That may happen if it becomes routine or if you're telling your employees, hey, you normally get paid on Tuesday, we're gonna pay you on Friday. Moving forward, we're gonna pay you on Friday. You know, we said we were gonna pay you on Friday. We're gonna pay you next Tuesday again.

We're gonna move it to Tuesday again.

That's. That's problematic. So making sure that you have your revenue cycle shored up, you know what your cash flow cycle is, you know what cash is coming in, your cash inlays, your cash outlays, whether or not you have a line of credit, figuring out the creative ways that you can pay your employees. We're not in the place, Josh, where we can pay in, like, chickens anymore. Like, we got to actually use currency.

Valuable. They are super valuable.

They are. But we really shouldn't be doing that. Like, we shouldn't be bartering and trading. We need to follow the rules and regulations for the Department of labor.

I. I just bought eggs before I came into the studio here, and I bought 18 eggs, and it was 10 bucks.

Yeah.

Yeah. They.

They. Maybe we should reconsider paying people in chickens. Is that what you're saying?

I'm wondering. I'm wondering if. If you would pay me in chickens. I may not be that upset about it. So a question that I've always had is me being the operations guy, I need to make sure that, like, when I was at the truck dealership, we had stuff on the shelves because when someone calls up and wants parts, we need to be able to, you know, sell the parts. We need to have them in order to sell.

Right.

I get that whole side of it, the paying the employee side of it, from the CEO side of it. What are the things that you're like, okay, this is why we need this money.

Wow. I mean, some of it is.

I know it's a very general question. The visionary side of it, I guess, is what I'm.

Oh, so we need the money so that we can accomplish the things for mission, so that we can grow and fulfill our purpose and make things bigger. Is that what you're thinking, like, the big CEO hat, or is it the. We want to follow our strategic plan. Like, we know that we need to pay X, y, and Z. In our payables, like these are all due, but which ones are more important or which ones are going to get us further down the line? I think sometimes, especially in operations, it's very easy for us to say everything is due and we have to pay everything. Yeah, duh. But there are times where you don't have the money to pay everything. And so you've got to figure out, okay, how do I lengthen that cash cycle? What's the right thing? Who are the people that I can tick off that are still going to do things for me or do I need to move in a different direction? But part of that too, Josh, is I think, I mean, I've dealt with companies in receivership. It is being willing to have a conversation with somebody and say, look, this is what the payment plan needs to look like. I would say the first thing that you do, especially in a small business, is you don't get way over your skis and thinking, oh well, as soon as I get this payday, it's all going to work out. You kind of have to run your business. And I know this is hard on the visionary side because I think oftentimes we try to run really fast. We have to run our business like we've got a 60 and 90, 120 day cash cycle. It's really important to be fiscally responsible. And it's hard sometimes when those checks come in, those bigger checks that maybe we weren't expecting and we're like, because they paid early.

And who's done that? Who has paid early?

Occasionally people pay at the end of the year. Lots of people pay early. I'm just gonna say it quietly. Their accountant tells them, pay this bill now. So they do. But it doesn't happen often. But when it does in a small business and we're like, woo hoo. We've got like 20 extra thousands. We got $20,000. 20 extra thousand dollars. $20,000 extra. That's what I meant, $20,000 extra. What are we going to do with it? We're going to go buy this piece of equipment. It's like, wait a second, we have to pay for this, this, this, and then we can look at this piece of equipment. So it's figuring out, you know, what do you finance, what do we need to do to move the business forward that's going to pull the biggest revenue producing levers. At the same time, there's that balancing act when you're hiring people, especially when you're scaling, because there's that piece where you are going to Outpace expenses. You are going to have or outpace revenue. You have higher expenses than you do revenue. Sure. Especially on the scaling side. So how do you build the boat so that it can weather that storm of everybody needs you to pay them right now.

Build the boat. I love that there's a saying, and I'm sure it's been other places. One of my favorite movies is Spy game from early 2000s.

Okay.

Robert Redford, Brad Pitt, great movie. Robert Redford looks at his assistant and goes, when did Noah build the ark? She kind of shrugged. And he goes, before the flood. It's interesting because this comes back to boat is a B word. Budget is a B word. So here's the problem. As an operations guy, I'm looking at it. I get the budget after it's done. I look at it and I'm like, great. It's black or it's red.

When.

When trying to budget it. Having a budget is like having a plan. You know where you're going and that path suddenly changes. Something is. Something is going to change in your budget. Unforeseen bill, employee needs time off, you. Something breaks, whatever. What's the best way? I mean, budget is the, the, the solution that helps solve this problem.

Yes.

What is the best way to make sure that someone is doing their budget besides just doing the thing?

It really is just doing the thing.

I was hoping for some other thing.

No, it's not. It's not super sexy at all. It's just create the budget. And I can tell you, I know more businesses that don't have a budget, don't operate on a budget than do. I mean, same thing with, I mean, nonprofits. You have to have a budget. Doesn't mean you follow it. Your board would like you to.

It's a loose guideline.

It's a loose guideline. Same thing with small business. I think we always need to look at it. I think oftentimes as business owners, we think that, okay, we've created this budget and now it's set in stone. And that doesn't give me the ability to be creative. That's not true. The budget is simply guardrails. To be able to figure out what do I need to do, how do I move forward? And it's a moving target. It can change. You hire more people, your budget's going to have to increase. But you've got to be able to because there's the. There's the B word budget, and there's the F word forecasting. And that is a whole nother animal.

Because yeah, when I think budget I think of another F word.

Yeah.

It's not forecasting.

Not forecasting.

It is not. It is not forecasting. That's weird. The thing that I, the what's interesting there is you said like the budget. The same thing and I believe I used this quote last week. The moving target. It is a moving target, but by golly, be aimed at something.

Yes. And be rational and practical. Ouch. We don't get to dreaming big is not for your budget. Okay. You need to be practical. Assume that you are going like to me, this is again me with a ton of time in the insurance industry and always looking at what can go wrong. You treat your budget like you're going out of business tomorrow. What do I need to really run my organization? And then what do I need to grow my organization? Those are two different questions. But then you can give yourself that range. There's the, this is what we need and have to have and then this is ideally where we want to be and that's where the forecasting comes in. So you kind of have to. You marry everything together and kind of look at okay, is this something that we can all live with? And you need to know if you've got people in your organization. Sales is never going to like that you give them a budget. Marketing is always going to be pissed at you because they're never going to give you enough money. And I mean HR is basically going to say I need you to give me enough to keep everyone happy and train and develop people so that they stay. Do not just keep them there so they're a hostage. You have to create a training and development budget to encourage people to want to stay with your organization. Otherwise you're going to have some major turnover within your org and you're going to deal with the costs related in adding additional people and dealing with one way or another. You are. So just think of it that way. And then the other part is, you know, as you're building in those long term contracts, what do they look like? Not just your revenue cycle with your clients, but then also the things that you know you are always going to have to pay for. Don't forget that you have utilities. Don't forget that you might have rent somewhere. That thing on your desk that you type into. I mean, how many subscriptions do you have? Really understand what your numbers are.

Don't make me look at those numbers because those numbers are upsetting.

And if you're like, I don't remember what they are, pull all your credit Card statements together, load them into an Excel spreadsheet, throw it in chat GPT, and then create a budget like you can forecast in an easy way. We've got some good tools now that can help with that.

I have actually started using taking the general ledgers, dump some of it into notebook LM and say, here's the past four years and what am I messing up? And it's kind of interesting to see where, I mean, there's portions of our business where I've noticed that we've, I mean, all but eliminated them. And I was like, oh, I forgot, we don't really do that anymore. Why am I still looking at that as a revenue stream? Because it's not something we really do anymore. And I needed that pointed out to me. So from the flip side of this we've talked, I am the, you're more, more visionary. I'm more the ground, feet on the ground, make it happen type of guy. My business, I'm pretty typically very conservative with cash flow.

Yes.

Yeah. Oh, yeah. No, I, I, I like having cash. But like, I've, my accountant's like, why, why is this here? She's like, use this. And I'm like, well, no, I, I, what happens if there's a rainy day? She's like, you're not going to have three rainy days. You can't, you can't bank on three rainy days. She's like, bank for a rainy day.

Yeah.

What do you think with something like that? What the flip side of cash flow? Because too many people run out of money, but so many people are stunting themselves by not using their money or their credit. And we'll talk about credit here in a second.

Yeah. So you have to remember that these, they're tools. So, Ooh, I like that. The credit that you have. Credit is a tool. Strengthening your cash cycle is a tool. Money that you have in reserves is a tool. Also money that you deploy in other ways that can make more money for you while it's sitting still. I mean, that's something that, especially as a small business, I can understand the accountant and the CFO that say you need to deploy more money. At the same time, as someone who's gone through an organization whose revenue was cut in half overnight and had to figure out how to make it all work, still make payroll with the same amount of people, I can tell you that having cash reserves can be really important.

Back to that whole pay your people.

It really does. There's a fine line. So I think part of it is as a business Owner. As a visionary, you're telling yourself, how do you want to grow? What do I want to do? What do I want to do next in scale? How do I make the cash that I have sitting work for me? Whether that's deploying it and trying a new in something in research and development, doing a new product, adding more people to your team as you scale up, or, you know, at the same time, if you're the business owner and you don't want to put more money in your business, you can take a distribution and do something else with it. That's okay, too. It's okay to have profit and want to spend it. Not on the business.

I'm pretty good at spending it.

Yeah, same.

Did you not just hear the motorcycle story? I'm pretty. Yeah, I'm pretty good at spending that. That's. That's usually not an issue. It's funny for me, because one of the things that I see with cash flow, like we talked before. I mean, I got three emails that people pay their bills. You're one of them. Thank you.

Yeah, you're welcome.

Occasionally we get people that aren't as good about that, and then they get upset when they say, hey, I want to schedule time in the studio. I said, hey, I want to schedule time in my bank.

Yes.

What's funny is something else that's tough to watch out for is like, we just got reimbursed for a grant and three people paid at the same time. The same. I mean, literally within an hour of each other.

Yeah.

It's awesome.

Yeah.

I look at the bank account, and I think we're doing good. And then I have to look at that budget to be like, okay, we're good. We're not that good.

Because we got to pay a whole bunch of bills next week. Right.

We're not. Go out and buy a lot of equipment. Good. No, were. Reinvest. Were. Do some more marketing. Do. Do some other things, but maybe keep some of that held back just for that rainy day. You deal with this far more than I do. Collaboration between. Apart between departments on cash flow.

Yes.

Just the tone of your voice says, oh, God, do I have stories. What do you see as the number one issue there?

The different departments believing what is priority.

Ooh.

So priority is top of funnel. No. Priority is customer delivery. Priority is employee engagement. No. Priority is customer engagement. And so marrying those together and helping them understand that it's all the same. I think it's one of the things that can be really beneficial when you have an organization that has A purpose or a mission statement and has core values. You can go look. I know that you believe top of funnel is most important, and I know that you believe that serving the current customer is most important. They're actually both together, so it both filters into service and excellence. So let's look at how we can collaborate together because we need to do both. So let's figure out how we can do both within the budget that we have. It doesn't mean that you're taking from this person or this department or you're taking from this department. This is all one organization. And there are going to be times where this department's going to have to support sales, is going to have to support service delivery. There are going to be times where finance is going to have to support it. Let's figure out how this all works together so that we can collaborate and continue to enjoy working together and moving the organization forward. Because if we're fighting and we're having a giant turf war, no one's getting anything done.

All I can picture is cats just. Yeah, right.

No, it happens.

I totally get it. So to me, the biggest mistake I see in this is businesses not doing budgets. Yeah, I see it. I, I've seen it in 150, 170 person businesses. I've seen it in one person businesses. May have been guilty of this myself at some points. I was about to say, you can't, you can't say. You're looking totally in the opposite direction of me as.

You're never done that. A budget thing. Never.

Now I do my budget all the time. One of my favorite things to do, lock myself in a room with a bunch of numbers and try not to lose my mind.

Yeah.

I do it in the studio here because this is a padded room. So when I accidentally lose my mind.

It'S okay, you're protected.

It's a safe space. It is a safe space for me. The, the question that I have kind of with this too is what do you see in terms of payment terms? Managing invoices, collection processes. To me, I see it as a lot of businesses have problems with those things.

Yes.

I, I see so many businesses when it comes to the. They set up clear payment terms.

Yes.

But 60 days are like, oh, crap, these guys are 30 days overdue. Let's send them a notice. Not on the day it's due. When it comes to this.

Yes.

You have a different approach, I believe, than I do when it comes to, hey, you're late.

Yeah.

Because it's your cash flow. It is what is your approach to someone when they're late on their payments.

So I would say the first thing that you need to think about as you're building your business and working with people, because as you coming from the insurance industry, we didn't have to worry about this because the insurance company would take the money, and if they didn't.

Pay, they could be the bad guy.

Well, they could be the bad guy. And we didn't get paid. So we just knew, oh, they didn't pay their premium. We didn't get paid. But we got paid 30 days after. So we never had to deal with collections. We had to deal with late notices. Hey, you didn't pay your premium. On the HR side, it became a whole different animal because we're invoicing people, they're supposed to pay the month before, and then we're delivering the service, and then they pay. So we have contracts that work through this. I assume, Josh, when we started this business, that everybody was just going to abide by their contracts. Like, I do. Like, I pay everything unless I, like, completely forget. Like, I pay. I get the notice, I pay the bill. Yep. Usually early, because I don't like to be late. That's one. That's just. That's personality. And I just assumed everybody was like me.

Yeah, no, they're not.

They're not. They're jerks. Yeah, they're total jerks. And so we built in our contracts like, this is. This is how this works. This is the late fee. This is the notice. But what I will say, too, is in if you have those contracts and they can be simple, it can be like two paragraphs on your invoice because they're signing off on it. I mean, or you do a scope of work and they're signing off on it. What you have to be willing to do, which I think oftentimes as small business owners, we don't want to do because it's usually us that has to do it, is the uncomfortable conversation of, hey, you didn't pay your invoice. I need you to pay it. So we'd rather just send that, like, click in QuickBooks, which is like, send reminder. So we'll send like 10 reminders.

Which goes to spam.

It does. Or it goes and they open it, but they don't do anything about it. So, like, I don't know if you can tell, but I can tell how many times somebody's opened an invoice. So I'll send it and then I'll look at it. I'm like, you jerk. You opened it, like three minutes ago, and you're not paying it. It's ten days overdue here. So I get offended. But then at the same time, it's, you know, I haven't asked. And so there are. There. There is a target of type of organization that until you send us a demand letter, we're not paying our invoice. Now, I generally don't work with those people after I realize that. But you can't. I mean, you can do a credit check to some degree, depending on what type of organization you're in. We don't do those types of things. So it's. How do you screen people? And then if you figure out, oh, they're the type of people that need a demand letter, all right, I guess we're just going to have one filled out and ready to go. And so that's.

We send this on day 31.

31, you're in violation of the terms of your agreement. Here's what you owe us. Here is your late fee. And then they're like, well, can you waive the late fee? No, we waived it the first time. We're not going to waive it again.

Right.

And so I've had organizations where they've said, like, hey, you know, I'm sorry, I was on vacation. I'm like, but you weren't on vacation for the last three times it's been late.

Or the 30 days before that.

The 30 days before that. We're at day 45 of your invoice that was due on receipt. So I don't know what to tell you. Would you like, can we have that? No. No, you cannot. Can you extend terms to us? No, I cannot. So no is okay. Or you can say, yes, I will extend terms to you. Here's what they are. But I need this amount at this time, and I need this amount at that time. And I will tell you, stop working for people that aren't paying you.

Yeah, it's funny because you. I've recently had someone that, I mean, it's like, hey, money's tight right now. And I'm like, well, it's not tight when you're asking us to do more stuff. It's kind of one of those things. And to me, it's like, look, protect your cash flow, because that is what is keeping your business alive. There's a lot of people that are worried about offending a client and saying, hey, you're late. And they approach it like that. Excuse me. Excuse me. I believe we might be late. And you're like, dude, they're just going to run you over. Just call them and be like, hey, look, I don't know if there's a mistake or something, but. And I love the saying, never assume malice where ignorance can be an explainer.

Yes.

If. If just can. Can explain it.

Yes.

It probably wasn't malicious. It was probably just.

Yes. Especially if you're dealing with an organization that has multiple departments.

Yes.

Because so oftentimes, and this is what frustrates me is there'll be. Because some of the organizations we work with are larger. There's an Accounts Payable or there's a controller, and that controller needed a document. And nobody told the organization, like, told us that you needed that document, but she's going to die on that hill for that document. And we're, like, getting ready to cancel them and not do anything with them. And the business owner's like, why are you. Why are you telling us you're not going to work with us anymore? Well, because Patty and Accounts Payable has said we're not allowed to get paid. It's always Patty jerk. So it can sometimes be a really just big misunderstanding.

Yeah, no, I've.

I've.

I've seen that. And I mean, I have one client that, I mean very good about stuff the one time, and I said, hey, didn't notice your. Your bills passed due. Oh, my gosh, yes. I mean, paid within minutes.

Yeah.

He's like, I'm sorry, I never even saw it. He goes, it was in my inbox. It got buried. He apologized to me until he was blue in the face. And I was like, no, no, we're good. I just wanted to let you know that I figured it was something dumb.

Yes.

But to me, it was. Once again, it's protecting my business. It's protecting my cash flow. Because the flip side of that is, too, is if someone's not going to pay me, I do not want to continue doing work for them.

No, we don't work for free.

No, no, I've done that. It sucks.

Same. Learned not doing it again.

Correct, Correct. I. In many cases, I'm like, why don't I just put my hand in a screen door and slam it a few times? That would be a better way to spend my afternoon. But, yeah, that. That, to me, it's protecting that cash flow has been a huge thing for me to be like, look, we're going to make sure it's here.

Yes.

I can't control everything that goes on out in the world, but I should be able to control when you're going to pay me.

Absolutely.

I, I, My advice to people on that is approach directly.

Yep.

Not like, I don't know if. Have you ever watched Family Guy? There is one where Stewie loans Brian money and he approaches him and he breaks both of his legs. Like, where's my money, man? Where's my money? You don't need to go that far. Not where's my money? But right. Not immediately. Wait a while before you call in the mob would be my, my main suggestion, ideally.

And if you've got a situation where it's become an issue, it's been consistent, document it. Just make sure that they know. Hey, yeah. Thank you for your prompt payment. Moving forward, I need to remind you of the terms of our agreement. And if you, if you can't abide by the terms of our agreement, we'll be forced to cancel you. Like, that's. And we've had clients where we have said, you know what? We're not going to renew you. Well, we need your work. We're like, that's fine. But now it's going to be, we need your money. We need your money. And now it's going to be more because we've kept you on this contract, but now you're not paying it in a timely manner. So now this is actually what our new rate is because we've got to put you in a new contract. You voided the terms of your contract. It doesn't exist anymore.

Yowzers. One more thing that I want to cover. We touched on this is credit.

Yeah.

Always something that there. I know some businesses are like, I don't want to, I don't want to get in over my head with credit. I got a story of someone that won a grant. It was, if I remember correctly, it was about a twenty thousand dollar grant. Okay, twenty thousand dollars of free money towards their business.

Yes.

It was a reimbursement grant. They were like, we don't have the $20,000 to spend. And I'm like, then why not get the credit line for that? Yeah, they didn't want to get credit. And I'm like, oh. I'm like, you're not getting $20,000 because you don't like to, to me, we got, we won a Grant. It's around $10,000. I am more than willing to pay four or five hundred dollars worth of interest.

Yes.

To get $1,000.

Yes.

That seems like a good trade to me. I give someone $500 and someone else gives me 10,000. That seems like I wish I could do that more often.

Absolutely. Please.

What are. I know you've seen businesses that have been in trouble with credits. What are the things that people should look at the top three things right off the bat that they should look at before, and let's say two good and one bad that they should look at before trying to get a credit line.

Oh, I mean, the first is, you know, you gotta have your budget done, you know, have your sound financials.

Have we, have we talked about budget?

I know if you really, I mean, if you want someone to be able to, if you want a bank to certify you and authorize you to have a line of credit, you have to have a solid business, solid business plan. You need to have performance. Like there's got to be that. We're not talking about a credit card here. Anybody can get a credit card for their business.

Yeah.

And that's a different type of tool to use short term, put it on your credit card, then pay your credit line off. But like you can use. There are different ways that you can do that. You can put it on the credit card, then you can use your credit line to pay it off, then you can like, you can extend your cash cycle. But I would say sound financials are the first thing to think about. The other is, you know, exactly what you were thinking about, like grants and different things. Like we have one through the state of Ohio. If you have employees called Tech cred, you can educate your employer, you can pay for employee education on all sorts of different things for your organization. Anything from systems to AI and understanding point of service, like any type of training and mechanical and we give it to, I mean anybody can apply for it quarterly. So I mean, those are things that you think of, you know, what are the things that I can get that are potentially not that I have to pay back what can be reimbursed. The other thing is that as organizations you can go for, you know, as you're a new business or growing business, scaling business, different types of pitch competitions, different types of grants and things that are available to you that are not. Nothing's refundable, it's just 100% towards whatever. It's in essence angel money. So really kind of thinking about what are those things that you can do? And then there's alternative loans, there's bigger things. You know, you can think about asset based lending, you can think about what you could do with credit card points. We as a family don't ever pay for personal travel anymore. We treat our expenses as Assets, Sure. So same. It's another thing to kind of think through, but I mean, especially as you're thinking about, you know, what's beyond a traditional bank loan for those organizations that have been brave and taken investors, that's another line that you can deal with, but that comes with its own baggage. It does.

Baggage is the right word for that. I think there's good and bad with it.

There are challenges and opportunities that come with investors. And I think that that in itself is. If you're. If you're a complete control freak, you're not going to do well.

How do you know that one?

How do I know that? I mean, well, I mean, I served.

Do you have experience as that? Maybe I do.

I do. Served as an interim CEO for two years in an oil and gas services company that had 122 general partners. Oh, gosh, that was a lot.

And I mean, really, when you bring an investor on, it's like any other relationship. It's a marriage.

It is, and you need to vet it and you need to have contracts and stuff in place. And it's really important, especially depending on how you're. If you are raising money, you have to make sure that you have things that are vetted by the SEC and everything's approved. Otherwise you will wind up in. In a non. A place that you probably don't want to be confined to or paying fines. So, I mean, it's really important that you kind of vet what are those things. On top of that, how do I pay bills? I would say, as you're looking at, you know, how do I continue to grow my cash cycle? What do I need to do? The other part is, you know, sometimes as business owners, when we're in startup mode is we think like, oh, like, if you've never really had your own business before, if you've always been a W2, you think that that Instagram story of the woman on the back of the boat just like checking her planner, like, everything's great. Like, they forget that. Like, she's running a whole bit. Like, that was 15 minutes. And in that she had that 15 minutes of peace and quiet and then she took 10 client calls and made sure that she made pay. Like, you don't. It's a constant grind. So I think that's the other part is that that perspective of when you're growing the business, it's going to be hard and you may have to take another job or you may have to find other ways to support your income because the life that you became accustomed to when you weren't growing a business probably looks a little different than the one that you're in now.

Probably looks a lot different. Yeah, it's. But to me, it. It is. It's being prepared financially for that. And was there a. I forget what it was. Was there a B word that we kept referring to.

Mean banana?

Mean budget, I believe that was.

Yes.

I believe we mentioned budget.

Maybe budget and forecasting. Yes.

Yeah. Huh. Those are the. And not like the weather. Like, what's going to happen?

What are we going to do with sales? How are we going to. And part of forecasting is also how are we filling our pipeline? How are we doing the sales and marketing part? Which I think oftentimes as business owners, especially when you're starting out, you forget you get into the doing of. I want to do the work, I want to do the client work. And you forget that the client work disappears if you don't do the sales and marketing work.

It's funny because, like, I mean, with us being in service industries, it's different than people that are in like widget industries.

Yes.

As I like to call them. But the thing that I always like. I'm not big on quoting billionaires because to me it's. I don't find a whole heck of a lot of relevancy in it. One that I will quote is Mark Cuban and he has said sales cures a lot of problems.

Yeah.

And I believe almost all of them. Right, right. He goes. He goes. Sales cures a lot of problems. And I believe cash flow, especially in a service industry, is one of those problems that can be cured. Sales. Sales can help that cash flow problem.

Yes.

That being said, do you think there's anything we missed other than. Did we mention budget?

Budget. Just do your budget.

Do your damn budget, people.

It's not hard if you don't know how. Ask. Ask an AI to help you. Yes. You help me create a budget and ask me as many questions as you need for me to figure out this budget. Like you could. It's. I mean, really.

Yeah.

Just start from that space. I need you to explain to me, if you don't understand what a budget is, I need you to explain to me like a 5th grader how a budget works. I mean, because let's be honest, there's a lot. There's a lot of people in our. In our purview that maybe didn't get taught how to do a budget, whether it was in school, whether it was in business. I mean, I'll be honest. I don't think as I go back to my mba, that sounds awful. They're gonna be mad at me. I don't think.

Let them.

We talked about budget. Most of the time our finance class.

Was, you know, because like you said, it's not sexy.

No, it wasn't. So we were more about, like, stock market and earnings ratios and all. Like, those things can help inform your budget. But at the end of the day, you need to take in more money than you're taking, like, letting out. And if you're going to be in a different type of budget, then you really need to make sure you have all your levers that you can pull on cash flow. Having a good relationship with your is probably the most. Another thing that I would say, like you said, is there anything left that we didn't say? Have a good relationship, don't be afraid of your commercial banker, and maybe make more than one friend.

It's funny you say that because there's actually two banks that we work with for that reason. You never know when something's gonna go sideways.

No.

And the other piece that I would add to that, for me, is a personal thing. We apply for credit when business is really good.

That's the whole point. You don't apply when you need it. That's the rule.

Apply yesterday, people. If, if you're. If you feel like, hey, I'm in an okay spot right now, I don't need credit, now is the time to apply.

It is. And as you're figuring out, when you sign your documents, whether it's a loan, whether it's a line of credit, read all the Covenant compliance things that you need in your loan documents. Because if you're out of Covenant compliance, that can be a challenge for you. So always just kind of think, you know, you've got your budget, you've got those things. But on the back burner. What if I have a building? How. How occupied does it have to be before the bank can call my loan? If it's a business, what revenue number did I commit to hitting? And if I don't hit that number, at what rate will they call my loan? Because that's when you can get into a challenge and you're dealing with, you know, bank workout or receivership or those types of things. And that's a whole nother podcast.

No, thanks. No, thanks.

Yeah, no, been there, done that, bought the T shirt. Good.

Wear that next time. Yeah, wear that next time. That being said, I, to me, like, with cash flow, I just sit here and think, okay, make sure that there's cash make sure that there's cash coming in and you aren't able to make sure that there's cash coming in unless you've done a budget. It's like we planned that. We didn't. We definitely did not plan that. That being said, do me a favor, do both of us a favor actually go to the business fix.com we're going to have summaries of this podcast. We're gonna have news about other podcasts and stuff like that coming up. Check out our social media by all means if you enjoy the show a review would be huge to both of us. Make sure you subscribe, get all the notifications, all that other stuff. We haven't figured out what we're talking about next week but I think that'll be coming out soon.

Yeah and it's not going to be budget definitely not.

That being said, if make sure you take care of yourself and if you can take care of someone else too, we will see you very soon.

It.