296: Finance Friday: How Do I Get Out Of This Cash Flow Crisis?
Everyone has experienced negative cash flow. If you have a troublesome rental property, you may experience negative cash flow. If you have a low income but an appetite for expensive eateries, you may also experience negative cash flow. But, more common than most, if you’re in the early stages of building your small business, negative cash flow may be a harsh but hard to mitigate reality.
Chris is feeling the sting of sinking purse strings every month. At the start of 2020, Chris left his old job as an engineer to start working for himself. He hired a couple of employees and started taking on more and more work. But, he’s spending too much time training his junior engineers and not enough time locking down high-value contracts, leaving him in the red every month. Surprisingly, more business owners face this problem than you would think.
Scott puts on his CEO hat to dive deep into the finances of Chris’ business and gives some challenging, yet reasonable, advice on how he can immediately improve his financial situation. With suggestions from both Mindy and Scott, Chris may have a better picture of how he can go from cash flow negative to very comfortable with highly positive cash flow in the near future. You may not be in Chris’ position now, but if you ever plan on starting a business, or have already, this episode is a MUST.
In This Episode We Cover
Cash savings and why it’s always important to keep a strong safety reserve (especially as a business owner)
How to break down your negative cash flow situation to find the most costly expenses
Starting a business vs. continuing to work at a job and why entrepreneurs should be prepared for risk (and loss)
How to establish whether or not an employee truly brings value to your company
KPIs, goals, and getting on the same page with your team and employees
Executive assistants and why high per-hour earners may need them the most
And So Much More!
Links from the Show
Check the full show notes here: https://www.biggerpockets.com/blog/money-296