If you are a business owner, you’ve likely asked yourself at one time or many times, “Why am I doing this?”

You’ve likely had the frustrated thought, “It would be easier if I got a job … at least then I’d be guaranteed a consistent income and at the end of the day, I could leave work behind me until the next morning.”

Owning a business is, indeed, an emotional and mental rollercoaster. There are the proverbial highs and lows, but at times there seem to be many more lows.

Believe me, as a business owner myself, I’ve experienced these desperate thoughts and the times of “more lows than highs”. Over the past 20 years, I have started, bought, sold, franchised, licensed and systematised several businesses in a variety of sectors, including retail, education, technology, medical, charity and construction.

No matter what business, sector or industry I work in, the two most common areas I find business owners struggle with are cash flow and sustainable business growth. Most people will look outside their business to fix these issues, but as you will discover, my approach is to first look inside the business: to look for any cash leaks, tighten up on expenditure and then leverage the current customer base. Once this is done, I look outside the business to grow the customer base and invest in proven marketing strategies to scale the business. Doing this will save both time and money. If you find yourself sceptical about my approach, by the book’s end not only will you come to agree with me, but you’ll already be starting to enact these systems for increasing the cash flow in your business. That’s how potent it is.

Driver or Passenger?

For many of us business owners, a primary reason we started our own business is because we want to be in control of both our own time and income; to have the choice to do the things we want to do and not have to report to anyone. So that’s another reason why it’s so frustrating when it feels like we’re no longer in the driver’s seat of our own business, when it feels like our business is running us, rather than us running our business.

For over 20 years, I have found this to be a common occurrence, not only during my own business career but for the business owners with whom I have advised and worked with as well. I experienced this myself in the early years of embarking on my entrepreneurial journey. I was running a successful retail business and, as a very young and naïve 20-year-old, I felt we were doing fairly well.

However, there was a constant struggle to grow or even maintain the cash flow. One day, an invoice would be paid and I would have money in the bank, but the next day, I would pay a supplier and fall into overdraught. As payday drew closer and closer, the more I panicked. I’d be hoping and praying there would be sufficient funds to pay my staff …

Every month was a struggle to keep my head above water. Just as I surfaced to take in air, another wave of outgoings would hit me and I was pulled under, back into overdraught. We were working hard, but every day was a fight. No matter how much effort we put in, the situation didn’t change; some months it actually got worse!

Whether they would admit it or not, I’m sure most entrepreneurs have gone through this phase at some point in their journey. Maybe you are there right now?

The fact was, I needed to do something to get my retail business out of this vicious cycle. The management accounts showed that we were a profitable company, but we needed more money. The most logical thing to do was to increase sales. This logic stands to reason: if a business is profitable and needs more money, sales will need to increase.

So we did exactly that. After a mammoth marketing drive for a couple months, sales grew by an average of 20%.

Theoretically, that should have stopped the cash flow rollercoaster we were on. Unfortunately, the increase in sales only made the situation worse! Instead of having more money in the bank account, there was less!

This did not seem logical at all and it left me perplexed, not to mention extremely stressed.

One evening, after the shop closed and everyone left, I was staring at my computer screen, willing the bank balance to go up and wondering what I could do to get out of this mess. After a long while of sheer panic, I had to admit to myself that I did not know how a business truly worked.

There were only two options available to me:

1. To simply quit or keep going until the company died

OR

2. Learn the inner workings of a business and turn my then weakness into a strength.

And so began my journey as an entrepreneur and business owner.

I am pleased to say that we overcame the cash flow problems. It was not easy and many lessons were learnt along the way, the most important of which I share in this book, The Cash Flow Code.

Regaining Control with The Cash Flow Code

One of the most common issues I find in working with business owners is the lack of cash flow. In The Cash Flow Code, I share the fundamental principles for taking back control of your business and remaining on the front foot, whatever the future brings. I guide you through how to manage your cash and the systems you need to put in place to help you do this.

In this book, we’ll delve into the three core financial statements so that you can use them to regain and maintain control of your business and to allow yourself three-way forecasting. These three core statements we’ll be working with repeatedly are:

·       Balance sheet or statement of financial position

·       Profit and loss statement (P&L)

·       Cash flow statement

I will also share the seemingly illogical point that, although increasing sales is a key part of the strategy for increasing cash flow, it is the very last key to implement.

As surprising as it might seem, I found from experience that sometimes increasing sales can cause more harm than good. There are five other areas to focus on before any effort is made to increase sales. This may sound counterintuitive, but as you read this book, it will become clear. We explore this surprising strategy through multiple examples because only when you see how the numbers support it, will you become fully convinced and on board.

As you are reading this book, should you have any questions, concerns or you’d like further information and perhaps even assistance in implementing these strategies, please contact me. You can find my contact information and learn more about how I support business owners at my website, www.businessoptics.co.uk.

Your Power Tool

The Cash Flow Simulator is a “power tool” I created for my own businesses and for the companies with whom I consult. It’s a tool that allows you to predict what your cash position will be in the next 12 months. This prediction is based firstly upon your company’s previous 12 months’ performance and secondly, on any changes being implemented in the coming 12 months. In this book, I teach you how to use the Cash Flow Simulator and I provide you with access to it.

With this simulator, my aim is to equip you with the tools and knowledge to constantly monitor, measure and reflect on key areas within your business. Should any one of these areas start to suffer or fail, you will be able to take action quickly to rectify it.

Running a business is like driving a car. As the business owner, you are the driver of the vehicle. As a driver, you have various controls at your disposal: the steering wheel, accelerator, brakes, etc. You also have a dashboard that gives vital information in order to drive the vehicle to your destination safely and on time. It is only from the information outside and on the dashboard that you are able to determine the direction, speed, fuel level, engine temperature and the general health of the vehicle.

Constantly monitoring this information will allow you to make the required adjustments or decide the best course of action to take. Most modern cars not only tell you when you are about to run out of fuel but also if the engine is about to fail, a light is not working or the brake pads are running low. This is vital information to know before it actually breaks down, or worse, fails en route.

The same applies to your business. By constantly monitoring key areas of the business, you can address any problems before they negatively impact your cash flow, profits, customers and team. Within a business, this is a never-ending process. The more you measure, the more adjustments you can make to keep your business running within that ever-moving ‘sweet spot’.

The Cash Flow Simulator, along with several other measurements I teach you to use in this book, will allow you to measure and monitor the inner workings of your business. I also show you how to use these tools to identify and adjust potential problem spots. After all, it is better to make dozens of small adjustments than to be forced to make one large, unpredictable correction without knowing exactly what the consequences might be.

Whether you are just embarking on your business journey or you are a long-time entrepreneur, I am convinced that if you put The Cash Flow Code’s principles into practice, it will transform how you operate and view your business and even allow you to take back control of it. This book will serve as a guide to help you fulfil your goals and dreams, without making the mistakes that I, and possibly countless others, have made before you.

This all sounds fine in theory, but most important is what it looks like in practice and how it can be applied to your business …

Let’s take a look, starting with your business IQ and the “business hexagon”!