Pivot Into Profit– Episode 3
Welcome back to the third episode of the Pivot Into Profit series!
This mini series will focus on: critical mandates for cash flow, important requirements to run a successful business and everything in between. Be sure to check out episode 1 and 2 if you missed it last week (linked above).
In the first episode of the series, we talked about critical mandates for cash flow and got the foundation down. But now you might be left wondering, what should my cash goals be as a business owner? Luckily for you, this week’s episode is focused on Cash Goals!
Cash is Your Number One Goal
Shoot for Cash Flow. As an owner your number one concern is to create a positive, consistent and predictable cash flow. Cash flow allows a business to keep its operations going – it allows you to pay your suppliers, your employees, keep the lights on and, most importantly, pay yourself. Companies that lack cash flow are ones that struggle to make payroll, pay interest on invoices that are way overdue and have owners who are struggling in their personal lives.
Take lessons from Corporate America: start with a cash goal.
Failing businesses are all run the same: the owner works ridiculously hard in the hopes that some money will be left for them at the end of the month. That’s because most small businesses work from a calculation of “Revenue minus cost equals profit.” With this system it simply means they make money and they spend money, and they either owe or pocket the difference.
Successful companies work off a different equation:
“Revenue minus profit equals cost.” Do you see the difference? They start with a profit goal and make the adjustments necessary in their budget to achieve it. This is exactly how they survive in bad economies and thrive in good times. It sounds simple, but it’s a fundamental shift in thinking: when you do this, you learn how to price for profitability, to market yourself for value, and to optimize every expenditure.
Most importantly, you learn that an increase in cash flow isn’t a happy accident, but a predictable outcome.
Don’t just dream of making ends meet. Plan your dreams. Budget from the top down – pick a profit goal and work backwards. Give us a call or send us an email today if you need help with your financial goals!