Cash Flow 101: A Beginner’s Guide to Managing Your Business Money with Dr. Nadia Brown

In this episode of Straight Talk About Sales, Dr. Nadia wants you to know that if you’re feeling the stress of not knowing how to manage your business cash flow effectively, then you are not alone! Many entrepreneurs struggle with reluctance or lack of knowledge around cash flow management, leading to potential financial mishaps and missed opportunities for long-term stability. The fear of making financially unwise decisions and the uncertainty of being able to afford necessary support for your business can be overwhelming. It’s time to take control and make informed decisions to secure the financial future of your business.

It’s not just about keeping the cash flowing; it’s about what happens when it stops. Get ready to uncover the unexpected truth about leveraging cash reserves and strategic financial decisions that could transform the future of your business.

Here’s what you can expect from this episode: 

  • How mastering cash flow management leads to business stability and growth
  • Building cash reserves is crucial for weathering financial storms and seizing opportunities
  • Making strategic financial decisions to propel your business towards sustainable growth
  • Consistent cash flow can transform your business’s financial health and potential
  • Planning your finances for long-term business success and security

Remember to keep adding tips and strategies to your own sales toolkit that will improve your revenue outcomes and equip you to serve your clients at a higher level. 

Resources mentioned in this episode: 

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Go to Show Notes here.

Here’s the transcript:

00:00

Hey welcome to Straight Talk About Sales with Dr. Nadia, where we share the real conversations around challenges, opportunities, and the things that are top of mind as it relates to sales and increase revenue, particularly for women service based business owners. I like to interview other women or share my own insights and experiences based on what I see happening in the marketplace. Tune in.

00:40

You may have heard to say that cash flow is king and Honey, let me tell you it is it is a good good feeling when the cash is flowing. And I have learned through the years that often consistent cash flow while grade can cover a multitude of sins. So what do you do when the cash slows up? Or stops flowing? I’m Dr. Nadia Brown, founder of the Doyenne Agency and creator of Straight Talk about Sales. 

01:09

And in this episode, we’re going to talk about why it’s so important to make sure that we’re making strategic moves. And fiscally responsible moves, when the cash is flowing, to prepare for any times when things may slow down, or even stop all together, tune in. 

01:28

Hey, hey, so excited to be back on the mic. This is Dr. Nadia and season four of the Straight Talk About Sales podcast. And I’ve decided that this will be a solo cast season, which gives me the opportunity to talk about some of the topics that are I’m seeing or hearing or reading about in the news and in the marketplace. And then also things that I’m hearing, or seeing with clients, it’s gonna be a great season. And then we’ll bring back guests in season five, lots of great guests that I’ve been connecting with, to bring on the show. 

02:04

But to kick things off the season, I wanted to talk about one of those topics that I feel like sometimes can be almost controversial, which doesn’t make sense, especially for business. Just like why is this a controversial topic, and that is cash flow. So when you’re thinking about cash flow, and just how money flows in and out of your business, we understand that cash flow is extremely, extremely important. 

02:36

And yet for many entrepreneurs, or at least some of the ones that I have talked to have it either reluctance around cash flow, and really tracking cash flow management and financial management, or they just don’t do it at all. And then we do of course have those that are great cash management folks, and are really paying attention to how they can be more fiscally responsible within their companies. 

03:07

And so you may be wondering, like really Nadia?, but it’s true. And so one of the things I want to talk today about is how consistent cash flow can often cover a multitude of things. So there are a lot of different things that we can do well in our businesses, and there are a lot of things that we can totally dropped the ball on in our businesses. 

03:26

But if we have enough cash flow coming in on a consistent basis, it will often cover up those mishaps is when the cash stops flowing, there’s a hiccup. There are things that are going on in the marketplace, I think world changes sometimes then it starts to highlight those areas where we may not have been as diligent as we could have been. 

03:50

And so I don’t know why some of us are reluctant to use certain tools, maybe it’s just a lack of knowledge. Maybe it’s the perpetuation that if you just continue to sell, sell, sell, sell, sell, sell, sell, then it doesn’t matter. And there’s truth to that, like if you just sell and you keep selling and you’re never stopped selling, the cash keeps flowing, then hey, for the most part, you’re probably in a good place. 

04:14

But we know that we live in a world where that is not always the case. And depending on the size of your business, like that just doesn’t make any sense. Like I work with a number of solopreneurs or teams that are smaller. And so what are the things that you’re able to do or have to do to create in your business where you can take time off. 

04:39

And that often requires you to do a little bit of cash planning, cash management to allow you to then be able to forecast. So that was you know, so today, I just want to talk a little bit about that one. We definitely want to make sure that we’re making consistent sales to keep Cash coming cash flow coming in and things like that. 

05:03

And at the same time, we also want to look at how we can be more strategic with the cash that we’re bringing in. Like I’ve worked with clients and we have grown a business, but there’s not that person that is there partnering and being very strategic in the partnership with that particular business owner, they don’t have the right people around them in their senior leadership team or whatever that may look like, then it’s really easy to start making decisions from a place that is going to always be this way. 

05:38

Or I’m just making decisions based on how I feel. And so I have seen companies where to grow this. And then the cash has gone straight out the door. And then they’re like, wait, what, what happened? Like, what am I doing? How is the business now in a worse off position, now that we have more money than we were when we had less money? 

06:01

And so those are things to definitely pay attention to as a founder, as a business leader. If you’re still a solopreneur, or you’re like Dr. Nadia, I will always be a solo renewal. Great. And what are the things that you can do to really make sure your cash as it is flowing through your business is actually working for you. So one of the things is definitely cash reserves. 

06:26

But make sure you’re putting aside revenue and extra money, just in case like your rainy day fund, because one day it will rain. And you want to make sure that the business can continue to hum along, even if there’s some market disruptions, right, like we’re fine. I don’t have to do mass layoffs. I don’t have to shut down to business, I don’t have to do any of these things. Because we’ve been diligent and just setting aside the resources. 

06:52

It also is really prudent when you’re thinking about being able to now forecast and make some adjustments when you pivot, like our company has done some different pivots. And it’s always nice to know, when you have a little bit of cash on hand to say, Okay, we have x amount of cash in reserves to help us as we make this pivot because during the pivot, we shift an offer, we may shift a market right a target market, it may take a little bit longer to start to see those consistent sales come in. And we want to you based on our particular projections. 

07:27

So when you have someone if you don’t have that financial acumen or savvy, find a partner where you guys can talk about that where you can share like your my goals, and then find someone who’s not only just looking at the numbers, I think so times when we think about partnering, we think accountant bookkeeper, sometimes we call them bean counters, like it’s not so pleasant. 

07:49

And sometimes you have to find the right person, personality wise, who understands the numbers, and also supports the big vision and is really, truly looking for partnership to partner with you to help the things that you want to see happen in your business happen. And not just I’m only here to look at the numbers, and I’m not here looking at anything else. Those people do exist. I know they may sound like purple unicorns, but they do exist. 

08:15

So make sure you find one right so that you can then partner with them. And you can start talking about well, how do I create cash reserves? If you don’t know how to do that, like we just out here eaten everything we kill, right? So definitely, to be able to set that aside? How do I learn how to then be able to forecast that will then allow us to grow? And I’ll know when I’m in a position and I’m able to hire another salesperson, I’m able to hire support team, I’m able to get out of day to day because we’ve been looking at our revenue, we were looking at our forecast and we’ve been looking at our projections, and we know what’s coming positively. And on a reverse. We know what’s potentially coming in a negative if we don’t make some adjustments. 

09:04

He’s like, Oh, okay, we’re gonna be out of cash by this date, this time for us to make some adjustments. But if you know about those things ahead of time, and you’re looking at your numbers, and you’re making those adjustments, then you’re not always caught by surprise, like, oh my gosh, I didn’t see that coming. 

09:20

No, you didn’t see that coming because we weren’t looking at your numbers and you didn’t know how to make the adjustment because you weren’t working with someone that was a great partner to help that happen. Another thing is it helps to reduce stress. 

09:34

Having a business and being a business owner being a business leader, being a founder is stressful enough. There’s so many things, it’s on your plate, your big vision, you’re doing a lot of different things. A lot of times we have a lot of different pieces moving and working with team as our team grows, it can be a lot. The last thing you want is an add financial stress. 

09:55

And one of the reasons that I often hear why people don’t hire support and they feel like they’re kind of stuck in a certain place in their business is when they don’t know how to hire or when to hire. But the bigger question is, how am I going to pay for this person, and can I pay for that person salary, whatever that particular salary will require, on a consistent basis, like I may be able to afford them now, but am I gonna be able to afford it 6  7 8 9 10 months from now, right. 

10:23

And if you don’t have the support, and you’re not looking at your numbers, and you’re only looking at what’s happening right now, in the moment, it can definitely really set you up for failure right? In the future. And I’ve seen it time and time again, where things are great, is a gravy, the cash is flowing, and sales are come in. And if for whatever reason, there’s a hiccup, and then it’s a problem. 

10:45

And now you’re having to have those difficult conversations with team, either you’re paying them late, not paying them at all, or you’re having to have those not so fun conversations, I just can’t afford to have you on my team at all. And not only is it a hard conversation to have in terms of you’re having to let go a team, but then who’s going to do the work that they leave like that work, when they leave doesn’t mean that that work no longer needs to get done, right. 

11:10

And so now you’re just now in that place of, I’m having to take back work that I had given away for a reason, like, there are reasons why I took those things off my plate, or I’m having to now completely restructure my business in order to accommodate now restructuring the business isn’t a bad thing. And again, when you look at your numbers, it may make sense to do that. 

11:33

But you can make that from a place where there’s probably fewer emotions involved, I won’t say none, but you’re making it from an informed place, you’re making an informed decision. And you can be a lot more confident in that. And you can probably see it coming a lot sooner and prepare and help people prepare for those types of things versus just waking up one day and like, oh, shoot, I’m a big, big, big, big trouble. 

11:57

So again, if you’re looking at consistent cash flow, I’m all for it. I’m all for consistent cash flow, I definitely want you to continue to build that and work towards that and keep that up in your business. And I also understand I’ve been around long enough to know, life happens, right things happen, whether it’s a personal situation, or it’s a global situation, or whatever is an industry situation like things happen, sale, sometimes slow down. 

12:30

So a lot of that last year 2023, a lot of longer sales cycle. So yes, the sales were still happening, but they weren’t happening like that they were happening more like, and again, if you don’t have the cash reserves in place, or you understand the forecast and to make those adjustments, and to be prepared, that even slow sales can be detrimental. There’s no sales or slow sales. And depending on where your business is, and how you’re truly managing the cash that comes in, can be detrimental. And definitely, if nothing else, stressful in your life and in your business. 

13:11

So those are definitely things you want to pay attention to. And I get we’re always like, you know, sell, sell, sell, sell, sell, sell, sell, sell, sell. And again, I lead the sales agency love it. 

13:21

And I also want you to make very financially wise decisions, may be delaying some things, right, that we’re doing in our businesses, and not always just making our decisions based on emotion. I know emotion is part of it. We are emotional beings. And there should be a nice mix in there. 

13:41

So that you can definitely help create longer term stability and sustainability in your business. Is it fail proof? No, like things happen. And sometimes you have the cash reserves and the cash runs out depending on what’s going on. But it’ll definitely help you be in a much better position. If you do that, and you prepare for those different things that could potentially come up versus running a business like it’s going to always, always, always always be like this, we’re going to always be in growth. 

14:15

And every single month, we’re just going to make more and more and more and more and more and more and more versus Okay. Things are great now. And yes, we’re going to do the things that we need to do in order to keep things looking the way we want to do based on whatever revenue goals you have for your company. 

14:32

And we also want to make wiser decisions by looking at how can we best prepare for when or if things take a turn, even if it’s a slight hiccup in the business or in the marketplace, where it could cause some issues for us. Unpleasant and how do we better protect and build in buffer. 

14:55

So those are things that we definitely want to start to think about the because you don’t want to have those conversations, and you have those opportunities to really make different decisions in the business. And so when you’re thinking about cash flow, how are you tracking it? How are you looking at cash forecasting, and what types of goals and benchmarks you need to track. 

15:26

And then also, how are you best preparing for any time, if for any reason, things don’t look the way you need them to look or want them to look from a sales and revenue perspective, because things happen, and is better for us to be prepared. And I’ve seen it so many times. 

15:47

And again, especially when it comes to sales, I hire salespeople, and their job is to just go out and just sell and all the time and just make things happen. Or you feel like that’s your role. And it’s great, and that’s part of it. And again, even in a sales perspective, there are things that are beyond your control, you can only control what you can control. 

16:07

And so building in those buffers, working with strategic partners, having those financial advisors are experts on your team that work with you to make sure you are making these different decisions, to protect the longevity of the business, to protect the business’s reputation, to protect those who are working with the business, your team, your vendors, your family like this can have massive ripple effects that we don’t often see. And so it’s important that we’re thinking about this. 

16:42

And you be like, really, Dr. Nadia, we got to have this conversation today. Yes, I just had a training with some of my clients on let’s look at the numbers, let’s do the math to make sure that we’re you know, during our pricing, like we’re considering the cause we’re taking these things into consideration. A lot of these are newer business owners and you know, getting their footing. And it’s a great class to teach. And during that I’m like, wait a second, some of my more established business owners could probably use a dose of this too, because we don’t always pause and look at the numbers, count the costs. 

17:19

Don’t just sit here and start taking stuff and throwing up numbers and doing different things without really looking at does this make financial sense? One of my clients text me today, she was like, there was an opportunity that came up for me, she looked at the numbers and she’s like, I’m gonna have to pass because the math a math and that’s exactly what she texted, the bad things happened, Dr. Nadia, and I was like, great, it’s not that she had to pass on the opportunity. 

17:45

I don’t know, we’d haven’t had a chance to talk about it yet. I’m gonna choose excited about or not, but great that you were able to make a decision from an informed place. And you know, that ultimately, no matter how excited she may have been about this opportunity, if the map a map and say no, or not now, and let’s get the numbers straight. 

18:09

So while my clients today, not everyone was excited, probably not as excited as I was with my little calculator. Um, and there was just a lot of Okay, Dr. Naughty, and I said, you know, what, is going to be fine. Take the time, let’s do this, do the work, no matter how painful. 

18:26

Let me know what questions you have. Because I want you to be in a position where you can make decisions. From an informed place, you can know how much of a discount you can afford to extend or how much grace you can extend to someone if that’s something you do you know how to best structure your tiered pricing, if that’s something you want to offer, you know how things stack up in terms of the value and then you provide to your clients, when you take the time to do the numbers. 

19:00

And I invite you to do these reviews on an annual basis because have you heard the word inflation, things change. And so you have to adjust in your business, if you want to remain profitable. 

19:16

Too many women owned businesses are struggling and suffering because not enough of us are taking the time to do the numbers. Now they know that’s not the full picture, Dr. Nadia, and as can be slightly sweeping generalization, but that’s part of the problem. And so what are the things that we can do that are in our power and in our control to change? 

19:40

That’s one of them. You can look at the numbers. You can get support and helping you understand so that you can make better decisions in your business, better decisions that are going to position you and your business to grow. It may grow slower, but you want it to last for years to come and build a business that can truly support you the life you want. The type of business you want the hours you want to work, you want to take a month or two off. Great. 

20:10

How can the business support that? Who do you need on the team? Where automation do you need in place? How do you need to structure your pricing? In order to support that? What do you need to do this year to achieve your revenue goals? What do you have in place? Does it make sense? These are things that we have to pause long enough to do no matter how challenging it may be over how painful now if you’re like me, I can get excited. And I’m like, Oh, we got our calculators. But I haven’t always done that, like, you know, full transparency. 

20:44

And there have been times when I’m like, oh, that sounds good, right. And it’s like, let’s go back, let’s pause, let’s tamper down our excitement, and do our due diligence so that we are making the informed decisions, the right decisions, and also fiscally responsible decisions for our businesses. They may not always look as sexy as we want them to look. 

21:07

But we want them to be able to stand the test of time. So yes, consistent cash flow, once this flowing can definitely cover a multitude of sins. But what happens when it stops? Or what happens when it slows down? Remember, again, we’ve seen longer sales cycles, you know, buyers are taking longer to make a decision, they’re taking longer to think about it longer to you know, submit the deposit and make the payment and etc, etc. 

21:32

And many business owners found that while yes, we’re still making sales, yay. And even having a slower sales cycle was extremely disruptive to certain businesses. And however, I will add this, when you’ve done the work, and you our position, it puts you in a better it’s not a guarantee, but it does put you in a better position to then start to look at what some of that what are some of those contingencies, right? Like do we need to look at how we can leverage debt, if you believe in leveraging debt in your business, right? How do we do that? 

22:09

But you don’t do that from a desperate place That much I know, I’m not a financial planner, but I know you don’t make those decisions or get those approvals when you’re desperate. Right? You do those times? When things look good. And you’re making those right decisions, again, to better position you for when times may look like you don’t want them to look right, they don’t look the way you would like. 

22:29

So consistent cash flow check. Now, how are we leveraging the cash that we have? And I’ve heard this and you’ve probably heard it too, I don’t know where it originated. But my husband says often, it’s not about how much money you make. It’s about how much money you keep. And that is very true even in business. 

22:48

How much money are you making? And how much money are you keeping? And what are you doing the strategic moves you’re making with the money that you do have? So whether you have an eight figure business seven, figure six figure, it didn’t matter. But how are you using the resources that you have? And are you taking the time in your business to be exceptionally strategic with those resources as they come in and being prepared for if anything happens in the marketplace to buy you time and really put you in a position where you aren’t desperate, the team isn’t desperate, desperate sales suck. 

23:27

And you have that real opportunity continue and possibly even take advantage of opportunities that you may not have been able to take advantage of had you not taken the time to make some strategic moves prior to those opportunities, presenting them cells. 

23:45

So commit to me that you’ll set aside time if you haven’t already to a look at your numbers. And if numbers aren’t your jam, you’re like this is making me sweat. They’ll find someone find someone that can be a great strategic partner to support you. And that is going to come alongside of you to really help you make those decisions. 

24:05

Have someone to bounce ideas off of so that you can grow the business shoot us an email we have a few people that we would love to recommend to you just because we really want to see your team be successful. All right, this is another episode of Straight Talk About Sales. If you enjoy the show, please like and rate us on your favorite podcast platform and we look forward to seeing you against food today.