$7K engine repair... I ran out of money!

Hey, everyone, it's Mike Andes, and today I'm going to be talking about the three places in your small business that your cash is hiding. Right now, you're in a cash crunch. You need money for payroll. You need money for an engine that just went down, a truck that just broke down. Something is very, very bad in the business. This is what you need to hear, and that is the three places in your business that the cash is hiding. And this actually came as a result of one of our franchisees. They joined Augusta Nation, like, six, seven months ago, and they've been doing really well. They've actually almost doubled the size of their business and revenues over the past six, seven months. This is their first sprin rush, when you get a lot of growth in your business with lawn care and landscaping. So they've almost doubled, and that's great. But as I've said on this channel before, growth sucks cash. When you're growing a fast business, you're growing a business, and it's quickly growing, getting more employees, more trucks. Your revenues are growing. Growth sucks cash. And so he calls me or he texts me and was like, hey, man, I got the $7,000 engine that I got to buy for the truck that just went down, and I need this truck because we got all these jobs, and how am I supposed to make revenue if I don't have any trucks? And $7,000 is the bill for this. This engine, and he needs it relatively quickly. And so immediately, you got to realize that when someone's in this position, it's not because they're a bad business owner. All of us in the real world have cash crunches, and it could be equipment going down, payrolls coming due. Crazy stuff happens as a small business owner. And you're going to have a time in your business career where you're short on cash. And I'm gonna talk today about the three areas that you've probably not considered where the cash is actually hiding in the company. And this is what I did with him. And literally, a couple hours later, $18,000 worth of hidden cash was identified. Okay, so there's three different areas. The first one most people know about, and that is invoices that are overdue. These are people that you have done the work for, and they're a month, two months overdue, and they just never sent you a check. You didn't have a card on file. And now they owe you literally 30, 60 days later, and they owe you a good chunk of change because it's a big project that's the first place you want to go, that is the person that you want to call and say, hey Mr. Jones, I got to collect on this money. We if I don't collect on this invoice, it's going to go to collections. Make sure you have a good collections agency, by the way. You can set them up relatively easily. It's a good way to just be able to have that last mercy call before you send them to collections. People pay, especially if they have good credit, they don't want that dinged. So that's the first thing is make sure that you are collecting on those invoices. There's about eight or nine thousand dollars that, that were about 30 plus days overdue of projects that he just, hey, if you're, and you're busy, you forget to collect, you're so busy on the next job, the next customer, the next big project that you kind of forget about like collecting on the invoices that are 30, 60 plus days overdue. I get it. Then the next place, the second area that is not as commonly thought about is in progress. Jobs. And so what I told him was like, hey, are there any jobs right now that we can go completely complete that we can finish? Are there any jobs that you're kind of halfway done, almost completed, that we could go out and knock out the next day or two? Because you know, maybe you have a big paver install or a wall install or a molten stall. It's 4, 5, 6 day project and you're almost done, you're 80, 90% of the way there. Well, if you can just go knock the rest of that project out and then collect on the final part of that invoice on the job site, that's ideal. And literally what I want you to do is go to the job site, finish it up with your crew, maybe move some of your employees to that job, finish it up, and then literally go to the door of the customer like, hey, we just finished. You owe me $3,000. Go ahead and write the check right now. Or maybe you have a credit card. Don't just tell them, oh, invoice you tomorrow. Because guess what? They might pay in a week or two weeks or three weeks later down the road. Ideally you have a credit card on file, but better yet, just be at the project and be like, hey, write me a check. We're done. Final invoice, here you go. You know, do a walkthrough, make sure they're happy and then just collect right then and there. So that's the second place that Your cash is hiding, and that is incomplete work. There's literally 80, 90% of the work is completed. You've already paid for the materials, You've paid for the wages. You're basically finished the job. You just got to go finish it up, wrap it up, and collect. That's the second place. And there was about four or five thousand dollars of jobs that he was able to finish in the next couple days and just get the payment immediately. Last place, the third place. Most people don't think about this one is the places in your business where cash is hidden and strapped. And again, when you're really busy and you're just working hard, you can get, like, almost paralyzed because you all of a sudden get this expense. You don't realize he had a $7,000 engine you needed to get repaired immediately. It's like, where am I going to get that? Like, I don't want to have to go into credit card debt, or I don't have to max out my credit cards. And, you know, I don't want to wait till the end of the month. Like, if you end of the month would have come, he would have been an invoice for all the work that was done in June. He was a week away from that. But, hey, like, I need the money now. I can't wait one week to get this engine fixed. You might not be able to wait a week for payroll or for a piece of equipment that you got to buy. And so what do you do? Right? The third place is the one that people don't think about, and that is jobs that have been accepted, projects that have been accepted that are literally on your schedule, but you haven't collected the deposit yet for the invoice. Now, most contractors that I know, they'll collect 50% down in order to get on the schedule. And I recommend don't put them on the schedule until they paid the 50% down. But a lot of people, when you're really busy again, stuff happens. Stuff falls through the cracks. They're a customer, you know, you know they're going to be good for the invoice eventually, and they accept the project. And you put them on a schedule because you're excited. You just got to get it on the schedule. All of a sudden, though, you realize that, hey, I'm five, six weeks booked out, but next week I got a project coming up, and they haven't paid 50% down yet. This is what I want you to do. Literally call those people immediately and tell them, hey, we're booking out. Really Fast. I got you on the calendar, but we can't officially order materials and get the job rolling until you've paid the 50% down, the deposit, whatever that amount is, that down payment that you require, you can literally in the next 24 hours collect on money is 4, 5, 6 weeks down the road when projects have been sold and, and collecting 40, 50, 60, whatever percentage that you require as a down payment, you can collect that right now. And sure enough, he was really booked out. He's been really busy, a lot of projects on the schedule. He was able to collect another 5, $6,000 in just deposits that were required for that customer to get on the schedule Again. I recommend that you don't put someone on the schedule until they have a deposit. But when you're really, really busy until they pay that deposit, you know, that's when they should be going on the schedule. But you might just put them on the schedule because they're a good customer or you know they're going to be good for it. And, and now all of a sudden you have tens of thousands of dollars owed to you. And that is money. That is cash sitting in your business, hidden, strapped. And if you are looking for a quick fix, a quick way to get cash, these are the three things you want to look at. Number one, invoices are overdue. Number two, jobs are incomplete, almost completed. And if you just complete the last little part of it, you can then collect on the rest of the payment, collect on the rest of the invoice. The third place is jobs that have been sold and are on the schedule. But you're supposed to collect that 50% down, that 25% down. Whatever it is, there's literally cash just sitting there waiting for you to collect on it. And that is how you can get out of a short term cash crunch. Obviously the long term goal, everyone that's in the comments saying you gotta have three months of reserves in cash, of course you do. That's the perfect scenario. That's when you have a mature company that's doing really well. When you're growing, you're really scrappy and you're putting every dollar back in your business. You're gonna have times when you hit short term cash crunches and that's going to happen in your business. So these are the three areas you want to look at to get that immediate of fix for the business. When it comes to cash, I talk a lot about cash flow in other areas. Check this video out here, it'll be helpful as well. And I wish you all the best.