MBA1499 How to Manage Your Cash Flow During a Crisis

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Hey oh. Welcome to the $100MB Show Business Truths on the Daily Every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of $100 MBA, a complete business training and community online. And in today's episode you will learn how to manage your cash flow in a crisis. Making sure your cash flow in your business is predictable and smooth is essential no matter what's going on, whether there's a crisis or not. But it's especially important when something external is happening that will affect your income, that will affect your revenue, will affect the cash flow. So in today's episode, we're going to get really serious and tactical about how to get a handle on our cash flow and make sure we can pay our bills, pay our staff and keep our business going when a crisis hits us. Now we're in the middle of a crisis right now with Corona, but this is just one example. COVID 19 is not the end all and be all crisis. There's going to be other crises in business and in the world in the future, just like there were in the past. Whether it's the global financial crisis or any recession, that happens because that's the nature of the market and the world. So this lesson is timeless. I'm going to outline step by step what you need to do today. Do not delay, because every day counts in a crisis. So let's get into it. Let's get down to business. Before I jump into today's episode. We're talking about cash flow. We're talking about how to deal with this situation that we're in right now in our business. Every single business right now is hungry for more revenue. If you're one of those businesses, I'm giving a free live workshop, no strings attached, to show you some options for you to earn more revenue Right now. If you're interested in joining me, head on over to 100mba.net workshop. All right, let's talk about managing your cash flow. The first thing you need to do is look at your numbers, okay? You should have a Google sheet or these numbers down somewhere because you're probably managing your cash flow, your cash flow anyway. Okay? But let's take a look at your expenses and your revenue, right? You should have a list of how much money you're spending on every single item every single month, whether it's payroll for each person on your team, software expenses, server expenses, services, suppliers, whatever it is. You have a list of expenses. Have that handy. You want to review that. You also need, obviously, your revenue, how much money is coming in every single month. Now, this may have changed recently, so you're going to need to update this or add a tab to the sheet, which, with the current situation, okay? Now, if you're looking at your expenses and your revenue, and your revenue is more or even you might think, oh, cool, I'm good. Let me relax. No, this is not the time to relax. This is the time to save your acorns, right? To gather and have a stockpile, to have a war chest so that you can endure what's coming in the next few months and maybe even beyond this year, we don't know what the effects are on the economy that this is going to have long term. So we need to make sure we're making as much profit as possible right now more than ever. Okay? So don't sit on your laurels. If you are on the plus, if you're in the negative right now, if you've had a huge slash in revenue and most of us have, and now you're not breaking even, you're actually sure. At the end of this coming month, we got to take a look at this even more urgently so we can get you on the other side. Okay? The fastest way to Increase your cash flow and be more profitable is to lower your expenses, to lower the amount of money that comes out of your pocket. You're going to look at your expenses right now, and I want you to quickly go through each expense and ask yourself, do I absolutely need this expense to run my business, to keep it afloat? Okay, obviously, payroll might be the last thing on that list, but you might have other expenses that you can pause. So that's the first thing we do. We omit. Then we look at the other expenses left and say, yes, these expenses I can't do without, but which ones can I reach out to those companies, to those suppliers and cut a deal? People are flexible right now. In a crisis, people are happy to hold on to as much business as possible. So say, for example, you have a bill with a vendor, like somebody who's hosting your website, and they charge you $1,000 a month. Contact them immediately and say, hey, I need to cut out expenses as possible. I really value your service. Is there any way I can get a discount, a deferred payment, lower me into the plan so I don't cancel completely? What options do you have for me? Most likely 9 out of 10 times they're going to give back to you and say, we got something for you. Either a discounted plan for the next three months, whether it's, we can downgrade you, and maybe you don't need all those bells and whistles. Or even with some people, like, say, for example, one of those expenses is an interest rate or a payment you're doing to a bank. They can refinance you and they can help you pay lower monthly fees or lower monthly payments. You got to negotiate down your costs as much as possible. If you have staff members that are on a salary, a regular salary, every single month, you naturally have an obligation to say, I want to make sure they get their salary so that they can continue to pay their bills and their life is not affected. But maybe there's other areas you can cut out on. Most of your employees right now are probably working from home. You might have an office bill. I was just speaking to Noah Kagan. I was watching his video online about how he spends $40,000 on office space at Sumo Group, and now he's considering, hey, why do I need to keep spending this? If in the last three weeks all my team has been working at home, efficiently running everything, fine, maybe I can cut that expense of the office space, period, forever. What else can you cut out? Well, maybe there's some perks your employees can Live without temporarily that you can cut out. Whether that's like a cleaning service, some people have cleaning services for their employees, or maybe it's reimbursements for programs or training or things like that, where it doesn't actually take money out of their pocket, but it just cuts out any perks that you can trim the fat somewhere. Okay, now that we've cut out as many expenses as possible, renegotiated a bunch of expenses that we have. If you're still in the red or you're not making profit or enough profit to save those acquired horns, we're going to contact our accountant. We talked about accounting and accountants and how to choose a good one. Last episode, just yesterday's episode with our guest teacher, Brian Hamilton. So if you haven't listened to that, listen to that episode. Vital, vital to this lesson. If you don't have an account, get one immediately, okay? Even if you have them on retainer, if you have them part time, $500 a month, there's plenty of services out there. Why? Because your account right now can help you get money now. Okay? They can save you money on taxes. They're in the know. They know in your local government, your country, if there's any kind of tax benefits, you can save some money. If there's any kind of stimulus packages being offered to small businesses that you can take advantage of, a lot of people are just not doing this. And there's money on the table that the government's offering. We're talking about hundreds of thousands of dollars, whether it's a full out stipend, like a full out grant that they're giving you that you don't have to pay back, or even a unsecured loan. There's a lot of governments now that are giving out unsecured loans that can help you make it to the next 12 months. And if the terms are right and the interest rate is okay, and you can pay back that loan, that might be an option. But you can't do this on your own. You need an account. So it's well worth the investment of spending a few hundred dollars, $1,000 to get somebody on your books. You might have saved a few hundred dollars already with cutting your expenses. This is an expense you need, especially now, somebody who can hit the ground running, knows exactly how to file things for you and can make it happen. This tip alone can help thousands of business right now. Immediately. They can speak to our accountant. Their accountant can tell them, here are your options, this is what you can do. Here are some grants we can apply for. Here are some things that we can apply for. We may have to make some changes with your salary or make some changes with your expenses. But hey, we can do this. You might have to pay a little bit more in taxes next year, but you're going to get a whole lot more back because of these benefits. They're going to give you the options and they're going to file everything for you. And within weeks, you can have cash in your bank. Don't sleep on this because governments are helping people out, especially small businesses, and you need help. So let's take that help. Next, look at the trends of revenue and when you get paid. If you're a SaaS company, like we are at Webinar Ninja, you're getting payouts trickling in throughout the month. It's not like, you know, we get paid big chunks. Like if you're in the client business where, like, hey, you get like a contract for $50,000 and that chunk gets paid you at the start of the month or maybe the middle of the month, or you get a few chunks throughout the month. No, with a reoccurring kind of business or reoccurring membership, you're getting little, little, little chunks throughout the month. This means you're getting low steady cash flow, which is good because you can then time your expenses with that cash flow. So you got to look at all your expenses, and if they're like on a reoccurring bill, like a credit card or something like that, spread them out. Call these institutions out and say, hey, all my bills seem to be the first of the month or the third of the month. Can we move my billing date to this time of the month? Because you have some gap here. You want to spread these out. So that way all your expenses are kind of throughout the month. So say, for example, for the sake of argument, you had 15 expenses and every two days somebody would be charging you for something. Now, obviously, the bigger the charge, you want to make sure that there's money available and when you get paid. But spreading it out allows you to have more flexibility and you can get that flexibility through the vendor. So look at when you get the money in your revenue, when you actually get paid and have your expenses follow suit a few days later. Now, if you don't have a reoccurring membership kind of System or a SaaS business, and I'll talk about this in the workshop I mentioned, you need to get on this now, you need a reoccurring revenue type business because this saves you in These times, whether it's a membership site, content site, or you want to get into software, but maybe you don't want to build the software. Become an affiliate of a software company. It's the easiest way to get into software without building a software, supporting software, doing anything. All you do is sell it. You market it. Many, many people have become affiliates of webinar Ninja because of the advantage of, hey, I can sell a software, get reoccurring commission every single month, and all I got to do is the marketing. You could choose any software you like, you're interested in, that's in your niche, that is really coherent or congruent with your audience and their needs. But you might be saying, well, this could be all over in a month, and why am I building things that I may not need later on? Do not plan for the best case scenario Always plan for the worst case scenario. One of my favorite quotes from Warren Buffett is the biggest mistake an investor can make, or an entrepreneur or a business person is optimism. It's good to be optimistic in your personal life, but when it comes to investing and planning for your financial future, you have to be pessimistic. You have to say, let me plan as if we're going to be in lockdown for the next year. Okay? If that's the case, let me spend the next month building a system so I can have reoccurring revenue to take care of my expenses for the next year. And then after this is all said and done, this is all gravy. This is extra. This is for my retirement fund. This is for my, you know, dream vacation, whatever. The point here is that when you think, hey, this could be all over in a month, you're planning for the best case scenario, which could not happen. And what happens is that you're really not planning at all. You're not doing anything. It's always good to plan for the worst case scenario because you have a plan to cover you.

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There's a saying in business that cash flow is king. And this is true. And most of us feel it in these times. So it's time for you to take a hold of your cash flow, take hold of the situation and be in control. Because businesses that see the other end of this are going to thrive. They're the ones that made it, they're the ones that endured the storm and they're going to take over. They're going to really be on another level. So your job is to hang in there. And the way to do that is to manage your cash flow. Use the strategies talked about today to make sure you're in the surplus. You know you're making profit and you have some, you know, saving some acorns you're putting aside because you don't know how bad this is going to get. You also don't know what's ahead or how long this is going to last. So any extra cash you can hold on to is going to help you big time. The only expenses we're going to take on are ones I know for sure is going to make me money. Direct roi. Okay. If I have a formula for Facebook ads or if I spend $10 and I make $100, that's fine because I can definitely make that money back and then some. You know, it's a, it's a formula. The margins have to be super high if I'm investing right now. So make sure you get your cash flow in order. You're making profits, and that way you can breathe and your team can breathe and they can do their best work and they can feel grateful for the fact that, hey, my team leader, my company leader, my CEO, my founder has got my back. They're making sure that my salary is paid. Yep. I don't have any perks right now, but that's okay. I got to keep my job. Just today in the news, as I was recording this, Australia has lost half their workforce. Over 6 million people have lost their job. If you are one of Those employers that don't lay off your team, that keeps paying their salaries and keeps them working and engaged and focusing on something that is positive, you are a hero. Okay? You will not be forgotten. The amount of goodwill you're going to build with that team is going to be tremendous. I hope that helps. And I hope you enjoyed and found today's episode useful. If you did share it on social, Share this podcast the best way you can give us a compliment. Also, if you have a moment, leave us an itunes rating and review. We'd love to hear from you guys. Let's stay positive. Let's focus on what we control, which is our finances. We can take a look at what we can do and do the optimizations I talked about today. We're going to make it, but what condition will we be after it's all over? This is what we want to do here. We want to come out of this alive and strong. Before I go, I want to leave you with this. It's hard right now. Business is as hard as it is, but now it's getting super tough, okay? But this is where good and great get defined. The great entrepreneurs find a way to make this work, to find a way to survive, to make it through this period of time. If you make it through this time, you're going to be one of the greatest great entrepreneurs out there. The one that survived, the one that was resourceful, that found ways that cut expenses, that found ways to make extra revenue, that found ways to reinvent their business. Sometimes you're gonna have to change things all around. You know, we have people coming to Webinar Ninja because they have physical businesses. They have a karate studio, and they're like, hey, I can't give karate classes anymore. I don't want to lose these clients. They moved their karate classes to live webinars and they're continuing to charge their customers. They're keeping their instructors employed. They're pivoting. They're doing something that's a little bit uncomfortable, but they're doing what they need to do the right way. We can do this and we can. And we can get better in the process. Thank you so much for listening and I'll check you in tomorrow's episode Q and A Wednesday. I'll see you then. Take care. Of foreign.

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