Cashflow challenges are complex. And very distracting.
My tech support division began to eat cash in my first computer business. National surveys showed our clients ranked our client support as equal to IBM & HP. But the division was losing R400K each month. (In todays money).
My technical director told me the cost was there to stay if we wanted to keep clients happy. My accountant told me it was too high. But he had no ideas on how to fix it.
I snuck into the department one morning. I sat in a corner and listened. At lunchtime I asked the techies to try one small change. It cost us nothing.
Within a month that R400K loss turned into a R400K profit. This solved the cashflow issue. And our clients approval ratings climbed even higher.
Cashflow problems often just need a little insight.
Declining cashflow is a symptom of some deeper problem in your business. The symptom is simple. It’s easy to keep hitting on your bank. At least, at first. That’s like taking aspirin for transient pain.
But not every pain is the same. A pain in your left leg is not as ominous as a pain in your chest. And a chest pain which keeps coming back is even more serious.
Cashflow is a symptom of something deeper. We must diagnose the deeper problem while holding the pain at bay. And then fix the problem before it closes us down.
It doesn’t matter how good your deliverable is. It doesn’t matter how profitable your firm is. The day your cashflow dries up is the day you close your doors.