Working with small business owners every day, I am often receiving calls where someone is in ‘cashflow crisis’. ‘I don’t know how I am going to pay the bills this week?’ is a common cry.
There are times in growing a small business where everything seems a struggle, things are not going the way you thought they would go and the money just isn’t there.
There are two main causes for lack of money:
First and foremost is a BAD MONEY MINDSET. This is fuelled by a bad internal money story that we live by, and have probably lived by for years.
Secondly, not enough customers. Logical isn’t it, but so often it is the thing that small business owners fail to spend enough time on – learning how to be really good at sales.
Our ‘excuses’ endorse our lack of REAL action to improve these areas – ‘oh it’s the same for everyone out there’, ‘oh we have too much competition’, ‘oh it’s the GFC’. Therefore nothing changes, and we continue to reside on Struggle Street, and it never seems to end.
Here are 5 tips to get back in control when the money dries up:
1 GO BACK TO WHERE YOU WERE LAST IN CONTROL – When the money has dried up or is just a trickle and you are hanging in there by the skin of your teeth it’s a fair bet the business is out of control. The TEWAY strategy is ‘go back to the last place where you were in control’ and then work back from there. It might be that you need to downsize your premises, reduce your team members, cut some overheads. Find the place where you were last in control and get back there. Cutting overheads may mean going without some things, it may require a frugal lifestyle, and it may mean you work longer hours, stand down staff, give up premises and work from home. It may mean you have to refinance your home, sell your car, downscale what you are renting, sell items that you treasure, recapitalise the business, get a loan from family, increase your credit card or get a new one, or even get a part time job. The reason why most won’t do this is pride. Pride is an enemy of the Entrepreneur because its part of EGO that confuses EGO wants with logical needs. Entrepreneurs will do whatever it takes to turn a bad financial situation around as long as it’s legal and doesn’t violate the rights of others.
2 FIND THE CHRONIC CORE PROBLEM AND FIX IT
If the same issue is plaguing you again and again and again, its because you haven’t fixed it or dealt with it so it doesn’t happen again. If it’s a repeat performance, you have to find the cause, and fix it, otherwise it will keep reappearing.
3 YOUR BASIC BUSINESS MODEL IS FLAWED – it could be that your basic business model is flawed. It needs to be reworked and recreated so that profits can be consistently made. A flawed business model will drive your business into the ground, an average business model will make average profits, but a great business model will always make awesome profits
4 STOP ‘DOING IT DOING IT DOING IT’ AND START ‘GROWING IT GROWING IT GROWING IT’
There are only two core strategies – increase income and/or reduce costs. This dual focus should be at the base of your plan but regardless of how many costs you cut, if you are not spending 20% of your time (as a starting point) on growing your business you are going backwards. Your competition and increasing expenses will eventually eat away at what bottom line you have left.
5 TALK TO SOMEONE WHO’S BEEN THERE – Get advice from those who have been in the same situation and turned it around. (That’s most successful entrepreneurs). Work with a mentor or become involved in a mastermind group.
From the above strategies find 3 things that you can do TODAY to move forward, and do them. Anxiety over cashflow is a killer and can stall even the most ambitious business owner into temporary paralysis, where the mind starts to swing around in circles and then into a downward spiral. Taking action moves you forward, breaks the paralysis, stimulates a change and brings solutions. You feel back in control and can move forward again.
For more information contact Fiona: