The day my dad offered to buy me jeans (a tale of cash flow)
“How’s your cash, Tanya?”
I still remember the one and only time my dad, also a CPA, asked me this.
I’d left my job at a fancy accounting firm about a year ago.
I was working for myself with a small team and absolutely loving it.
And I’d just spent a really nice weekend with my family in Swift Current.
So when my Dad asked me this question just as I was preparing to drive home to Saskatoon, my heart sunk.
Why was he losing confidence in me now??
Did I look stressed out??
Did I look like I was low on cash??
[Oddly enough, things were actually going okay - I’d recently had my first $10k revenue month]
He could see my ‘deer in the headlight’s reaction so he quickly followed up with:
“Do you need money for clothes?” as he motioned towards my ripped jeans.
You see, dear friend, I was wearing jeans with intentionally-placed rips over the knees lol.
He thought my clothes were old and worn out because I had no money, not because I was trying to be fashion-y. Oh Dad…
I tell you this story because sometimes it’s hard to tell from the outside if a business (or person) is struggling with cash flow because of things like credit cards and other pricey, short term lending products.
But cash flow problems are real and you can only hide them for so long.
And if managing your cash inflows and outflows feels messy at $800k of revenue, I’ll be honest - it’s already costing you.. in 3am wake-ups, stress every time you look at your chequing acct balance, and hidden profit leaks.
If you don’t fix it now, those leaks only widen as you grow - and by the time you’re at $2M of revenue, they can take your business down.
So, let’s avoid that. Here are 4 hidden ‘cash flow killers’ / warning signs you want to watch out for:
Your money goes out the door way faster than it comes in aka expenses are piling up more quickly than you’re able to collect $$ from your clients because you have no accounts receivable policy → this means you have to start relying on credit cards with 24.99% interest rates to pay your expenses.
You have no idea if your bank balance is “high enough” - because you don’t have a cash flow forecast, you fly blind and trust that things will just figure themselves out. And sometimes they do, but other times, you can’t pay yourself because you have no plan.
You feel like payroll costs are a lot higher than they should be probably because they are.. especially compared to revenue. You hire a fancy HR consultant and - surprise - they want to add to your team! But you haven’t run the numbers. You don’t know that, if your revenue per employee is half the benchmark for your industry, you should actually look at role clarification / duties reallocation before panic hiring (again).
You only glance at your financials once a month and don’t really understand your P&L statement aka you treat revenue as profit and think “I’m rich” when you have a $100k month. What no one (but your bookkeeper, CPA or me) will tell you is that most service-based businesses have a profit margin of 20-30%.. so likely $70-80k of that $$ is already spoken for. And what about that emergency fund?
Friend: managing cash flow as a small business owner is challenging - I won’t sugar coat it - even if you don’t have a masters degree in professional accounting ;)
But it’s absolutely necessary if you want to create a business that allows you to pay yourself at least $15k / month and take that 2-week, (mostly) unplugged vacay to Tuscany.
So, if you’re reading this and thinking - yikes, I def see myself in the “cash flow killers” list, good. Awareness is the first step!
But I need you to stop pretending that these silent but deadly killers are okay or normal or will just magically take care of themselves.. because they won’t.
I'll say it again - your current cash flow probs are already hurting your bottom line. And what’s a challenge at $800k of revenue will 100% put a halt to your operations at $2M of rev.
Getting people’s cash back on track is exactly the kind of work we dive into with our Management Consulting clients.
It’s hands-on, roll-up-your-sleeves work where we come into your business, figure out exactly what’s going on, and design solutions that significantly improve the balance of cash coming in and going out the door.
Aka - you hand us the messy numbers, the “what the hell is happening with my cash?” question, and the stress of not knowing what’s safe to spend - and we handle the rest.
You’ll have our team - me (a CPA) and Elanne (former VP of Operations) - working hard to deliver things like:
A quarterly cash flow forecast so you can plan confidently, and not live in firefighting/reactive mode all the time
A concise, executive-level view of your current cash flow (not just your bank balance) so you know exactly where things went off the rails
A review (and potential restructure) of your org chart so you're not overpaying for underperformance..
Over the course of our work for you, you’ll get:
A clear, custom project work plan - so you always know what’s getting fixed, in what order, and who’s doing it.
Implementation handled so things actually get done, not just discussed, and
The absolute joy of being crystal clear on your numbers so you know exactly what’s profit, what’s corp tax, what’s debt repayment, and what you can safely pay yourself.
Want more tips on cash flow like this? Join my newsletter where every Thursday, I take you behind the scenes of small businesses and NPOs in Western Canada - what’s working and what’s not.