Cash Flow - How to handle cash flow struggles - Ask Evan

Hi, I'm Evan Carmichael. Welcome to another edition of Ask Evan. This is a special edition brought to you by TELUS. They have launched a campaign where they're giving $100,000 away to a Canadian entrepreneur. I'll talk a little bit about it at the end of the video, so stay tuned for the end. In this episode, I'm going to answer a question from one of our TELUS Talks Business readers who wrote in asking about how to increase sales. Sales. So the question was, thanks for the advice. I'm also running a company but struggling to increase my sales, cash flow, and I'm failing to pay my suppliers and my bank loans in time. I need more of your good advice because I want to make a breakthrough. So thank you for the question. Really tough situation, and a lot of entrepreneurs do get themselves in a huge cash crunch by spending more than they're making, and that, that is often a recipe for failure. And I want to, you know, really feel for you, and I hope that you can get out of this. I'm going to give you some tips to help you go through that. The first thing is really stop spending money. And anybody can spend money. This is what we saw a lot with my venture capital days. Anybody can spend money. It's not hard to spend money. If you give me a million bucks, you can go out and spend a million bucks. If you get the $100,000 from TELUS, I'm sure you can go out and find 100,000 ways to use it. But not everybody can make money. And so the important thing to do as an entrepreneur is try to make money before you're spending money. I hate spending money until I'm making money. And I'll invest my time and energy in new projects and trying to get them to go way before I'll spend my money. And that should be the approach that I think you should take and a lot of entrepreneurs should take. Look for ways to spend your time and energy to go out and earn money, but don't spend your money to do it. Once you see that you can make it work on a small scale, then it's okay to spend money to expand because you know it's working. But at the beginning, don't spend money. A quick example, even with these YouTube videos that you guys are watching, go back to my earlier videos and they were really bad. A lot of it was because I didn't want to spend money to invest in the equipment to create the videos until I knew that I was going to commit to it and there was a potential revenue model down the line for me. So the first videos are really bad. It's on a really old camera. The lighting is terrible. The audio is terrible. The content was still pretty good, but the money that would be spent on video editing and having a nice camera and having a good microphone, having good lighting that is much better in the videos now I started to spend money on that once I started making money from the videos, and it was as simple as that. So I used the momentum from the early days to get it going, don't spend a lot of money, and then as I started making money, I was able to invest back into the business and was able to build it up. And it's not that I couldn't have spent money to buy a camera and lighting, it's just, it's easy to go and spend money on new projects that never take off. So I always try to make sure that I'm finding a way to make money on these projects. I'll invest my time into it and energy, but I won't spend money until I find a way to make some of that money back. So that's kind of step 1. That can be kind of general advice, and how do I implement that? The next thing is go after companies and build around them. So try to build your product or service around customers. So I don't know what you're selling, you didn't mention in your comment, but go out and try to find guys and talk to them, potential customers who will pay you to solve their problem. The more you can build your product or service around somebody who has a problem and is willing to pay you for it, the better your cash flow is going to be. We made this mistake in my first software company. We spent all this time building this one feature that, as it turns out, nobody really wanted. It was an awesome feature, but we thought it was awesome, but our customers didn't really care. What was the point of that? If we had spoken to our customers earlier and found out what they wanted and built around their pain points and their problems, we would have had more money coming in, we would have been a more successful company earlier on. Now luckily we had enough good features in our software that people still wanted to buy from us, but the one thing that we spent so much time working on, nobody cared. I think a lot of entrepreneurs have that same thing where they spend a lot of time and energy on something that people don't really care that much about. You're not really solving a problem. So you want to talk to your customers, build around what their problems are, and you'll have a steady cash flow coming in. Coming in. It's great if you can talk to companies instead of individuals because if you can have a lasting impact with the company, they're going to hire you back. It's going to be bigger dollars, it's going to be ongoing commitment, and they're likely to tell their, you know, other companies about you as well. So it's great to have those relationships where selling to consumers can be really tough, where they may love it but they'll buy much smaller quantities, won't have as much need for you. So it's a lot harder to do consumer-oriented business than business. And the last tip would be to start with a service. And I don't know if you're selling a service or if you're selling a product, but I definitely gear towards a service, especially if you're in a cash crunch, because service doesn't cost you a lot of money. It's your time, which eventually you want to try to break free of, but at the beginning, you got to get to survival. You got to get to the point where you're able to make enough money to pay your bills. You pay your bank, you pay your suppliers, and you're making a comfortable living. So you gotta get to that survival point, and a lot of entrepreneurs never hit that, and that's why they have to shut down. So a great way to do it is start a service. Talk to companies, again, solve their problems, do it with a service, do it with investing a lot of time into it. And as you get closer to your companies and closer to your customers, you really understand their needs and the needs of the market, then you're able to introduce a product that can help them even more and you can expand. Product companies are typically more expensive, take longer to get going, have a higher failure rate than if you can start with a service, really get a cash flow stream coming in and be able to build on that, then your bigger vision may be to have products down the line. But I'd start with a service, especially if you're in a cash crunch. And then the last point is just your income is going to depend on how much value you provide to your customers. So the more value you provide to your customers, the more money you're going to be able to make. If you need more money faster, provide more value faster. It's really as simple as that. Entrepreneurs will make as much money as they're able to. They're able to charge more because they're offering a lot more value. If you're not able to get the prices that you want, it's because you're not giving your customers enough value. So look for ways to add incredible overwhelming value to ideally business customers and it's a service and hopefully that'll get you, you know, get your company off to that next level and get you out of this cash crunch that you're facing. Hopefully that was really helpful. Again, this video is sponsored by TELUS. They have a challenge going on where they are giving away $100,000 to a Canadian entrepreneur. You can enter at theglobemail.com/thechallenge. And I'm going to be one of the judges. We're looking at the end of May to be able to give away this money. So check it out. I'd love to see you guys there. If you did like this video, please give it a thumbs up below. I love seeing those come in. It always makes my day when you do that, so thank you. And if you have any questions about this video or other questions for your business, feel free to leave it in the comments below. I always check those out and I'd be happy to answer for you as well. So thank you and we'll see you on the next episode.