Category Archives: Cash Flow

Of Rubber Bands and Catapults: Strategies for Business Growth

A growing small business bears a great deal of resemblance to a rubber band. Left to its own devices a rubber band holds one shape. With the right type of pressure, a rubber band can expand to great lengths as long as the pressure is held steady or carefully stretched more and more. If too much pressure is applied or you lose your grip, the rubber band sails off across the room and someone loses an eye.


Apply this analogy to a small business. Sometimes businesses fade away because the owner doesn’t apply the right pressure (or any pressure) to move the business forward. Sometimes pressure to move the business forward is only applied sporadically, leading to inconsistent results. Pressure is applied and the business moves forward. Pressure is slacked off and the business moves back three spaces. Sometimes too many people are applying pressure in different directions, pulling the business in different directions, too. This creates infighting and factions that prevent the business from thriving. And often, small business are “stretched too thin” and find operating day to day outweighs business growth. And cash flow? Suffers every time. Every. Time.


Now consider the catapult. When someone refers to “going ballistic,” the catapult fits the bill very well. Using concentrated force, the catapult can hurl fire, take down walls, and make a big splash. Catapults are all about “go big or go home.”


If a small business uses a catapult approach to business growth, growth happens forcefully and fast. It’s a tried and true way of getting bigger, faster results. But, this method has its own challenges. First of all, if the catapult is not well-built, it will not sustain the force exerted and will fall apart. Building a strong business before attempting fast growth is necessary. That means having critical skills and competencies in place to build that solid infrastructure. The second big challenge with a catapult approach is to have a plan in place for once the walls are breached. Catapults open the doors to opportunities, but a business has to be poised to capitalize on those opportunities. All those expenses of catapulting and capitalizing can cause cash flow problems, too.


So, which business growth plan is better? The rubber band plan or the catapult plan. The answer is that it’s really just having a plan that is the important point. The plan determines the tools and skills needed. Executing that plan often requires the use of both steady pressure and the use of massive force. There is no “one size fits all” plan for business success. If there was, we’d all buy that book. The truth is small business ownership takes constant thought, planning, action, tweaking, and re-engineering. We work in an ever-changing field of endeavor where we must always be on the edge of our chairs, ready to adjust to circumstances as they come. And most of us wouldn’t have it any other way.


Lean Times in the Bean Fields: Why Business Owners Should Earn Minimum Wage

I believe in the concept of a minimum wage. The minimum wage that I’m referring to is not THE minimum wage–federally or state mandated for employees. The minimum wage I’m talking about is a minimum wage for business owners. You see, for many small business owners the Federal minimum wage would be a raise in pay. For some, it would be an immense raise in pay.

Let me use some examples of this from my own long and interesting career. I started work at the tender age of ten or eleven. My first job was babysitting. My pay varied greatly and often amounted to whatever was left in a neighbor’s pocket after the bar closed. My second job was working on a farm where I earned my money based on productivity in the bean field. I well remember working all through August to earn my first $20 bill. My third job was a huge step up since I earned minimum wage and had regular hours. Minimum wage at that time was $2.30 an hour.

What I realized at that young tender age was some jobs paid better than others. So, I started figuring out how to get the jobs that paid better. And that led me to discover that the jobs that paid better required more skills. So, I learned more skills. And more skills. And more skills. Until finally I could make a good living.

And then I became self employed. My pay was whatever was left over after the expenses of the business were paid. Sometimes $2.30 would have been a very welcome pay increase. Obviously, this is not a sustainable existence. (It IS obvious, right?)

Flash forward many years.

In my accounting and consulting practice, I’ve worked with scores of business owners. Many of them were not making a living wage. They did a great job creating good paying jobs for their employees, but they did it at the expense of their own financial health and sanity. Let me give you an example of how that looks from a numbers perspective.

A starry-eyed man, we’ll call him Joe, decides to start a business. To cover his starting costs, he empties his 401k account, uses his house as collateral for a home equity line, and maxes out his credit cards. Let’s say he needed a modest $50,000 to get the business up and running. Here’s the financial impact of that business startup:

1. The money from the 401k account is now no longer producing any interest or dividends, and has a tax penalty and expense.
2. The equity in his house has disappeared, he’s worth less and has more debt.
3. His credit card has increased his debt, plus added interest expense.
4. His cash flow is impacted by the payments on the home equity line and credit card.
5. The $50,000 ends up costing far more due to lost income and increased debt and expense.

Now, check out the various percentages attached to business failure rates. Depending on the source, Joe has a 5-15% chance of succeeding. An 85-95% chance of failing. Frightening odds when everything Joe owns is now on the hook. And then, let’s say the cost of starting the business ends up being $55,000 factoring in lost income and increased debt and expense. Now, let’s say Joe wants to get back that money over a three year period. Joe needs to pay himself about $350 a week to make that happen. This is before he even begins paying himself a living wage.

Meanwhile, Joe’s credit score has dropped because of his added debt and his iffy income. This makes him less able to get more credit if he needs to buy a vehicle for the business (or himself.) And every time he does make a profit in the business, the government takes a chunk of it for taxes. It’s a bleak financial reality for many small business owners.

Now, does this mean that small business is doomed? Does it mean anyone starting a business is a fool? I’ll leave that to you to decide. What I do know is that there is a far better way of doing business. A way that makes sure the business owner’s financial situation pays better than picking beans and taking the leftover change from mother’s night at the bar.

It all starts out with the business owner making the right choices for his or her own financial health. Can your business provide you with the return on investment you need in addition to making the minimum wage you determine you’re worth? Owning and running a business is a very difficult job. A job requiring a variety of skills and a huge investment of time and money. Make sure you are adequately compensated by structuring your business to pay you your required minimum wage. Anything less than that is an exercise in futility, financially speaking. Without that sustaining level of income, you can quickly find yourself wishing you could work somewhere for “regular” minimum wage. A few years in you may well be heading for the bean field to make ends meet.

Want to learn more about how to build a business that is worth more than a hill of beans? Find out more about From Chaos to Control; my crash course in small business finances.



The Rewards of Poverty

Raise your cupMany years ago, deep in the wilds of rural Maine, in a humble cottage at the edge of the big woods, lived a family of no means. In that cottage at the edge of the woods, lived a little girl. Tucked up under the eaves every night, this little girl was growing up poor. It was a world of poverty and want. It was a world of bricks heated on the woodstove, wrapped in newspaper and tucked under the covers to keep her tiny toes from freezing. It was a world of plastic bread wrappers worn inside leaky boots.

Hunger stalked about the door every day, looking for a chance to move in. But the little girl’s mother knew strong magic. She knew how to make soup from nothing to feed her brood. She knew how to stretch a penny until it screamed for mercy. She knew how to find a few coppers to tuck into a little girl’s pocket for a school field trip.

Faced with the rigors of growing up poor, the child grew strong. The kind taxpayers of the little town gave of their own money to fund a school for all of the children of the hamlet. And the little girl went gladly each day to the halls of learning. Nurtured by caring teachers, she learned valuable skills and gained knowledge that could help her leave behind the gnawing pangs of poverty. As she grew, she began to learn some magic tricks of her own. She learned to be a Cash Flow Wizard.

Lo, these many years later, dear friends, your Cash Flow Wizard has come to appreciate the great lessons of poverty. I learned to be resourceful. I learned to work hard for what I want. I learned to keep going when things were tough. I learned all sorts of valuable skills in order to survive. I learned how to get by on a tiny budget. And I grew a fine, strong backbone. In fact, growing up in poverty and want gave me all the tools I needed to start a business and to make it successful. That’s a rewards program you won’t find anywhere else.

So, during this season of celebration, raise a cup to the hardships that strengthen us and the resolve that keeps us going. And give generously to those causes that bring hope to those who need it. It matters.

Replace Quick Fix Ideas with a More Realistic Approach to Improve Cash Flow

A poor economy often serves as a wake-up call to the critical importance of cash flow management for cash-strapped small businesses. As a business owner, you should not expect a quick fix when you never seem to have enough cash on hand, but instead, look for deeper, systemic remedies.

Cash flow problems are symptoms of underlying business issues. If you don’t have a marketing plan, sales will suffer. If you don’t have good credit-granting practices, you’ll end up with slow paying customers. If you don’t use vendor credit wisely, you’ll run out of needed goods for production. Solving the specific business problems will cause the cash flow problems to evaporate.

A systemic approach might include the following specific steps for a business with cash flow problems:

  1. All customers are not created equal. Some are more valuable from a cash flow perspective. Meeting the needs of those most valuable customers through focused services or products has a positive effect on cash flow.
  2. Vigorously reduce unnecessary or bloated expenses like bottled water, coffee supplies, subscriptions you don’t read, products you don’t need or don’t need right now.
  3. Develop a highly focused marketing message aimed at attracting and retaining your best customers (this also works to repel the customers you don’t want.)
  4. Tighten up collections practices. A sale isn’t a sale until the money is in the bank.
  5. Get a firm grip on financial reality by developing disciplines like budgets and forecasts.

By taking a systemic approach, you can build a stronger business that is better able to withstand the rigors of harsh economic realities.

For additional guidance on conquering cash flow problems, download the free report Why Am I Always Broke? 7 Cash Boosting Secrets Every Business Owner Should Know at

And the Banker Said, “WOW!”

CelebrationThe life of a Cash Flow Wizard is fraught with peril. When I first start working with a business in serious financial trouble, for the first few months, no one knows if the business will survive. Even I’m not sure sometimes. I look for signs and indicators and data to tell me if there is a viable business under all that mess of trouble. Once I answer that question, I know we can pull through. And I say “we” because “I” don’t save businesses. It takes a team. Business owners, employees, vendors, bankers, accountants, and the Cash Flow Wizard all play a vital role in a business turnaround.

One business I was working with had a terrible relationship with the bank that held all their loans. The business was regularly late on loan payments, bouncing numerous checks, and had financial statements that were nonsensical. It was enough to make a banker toss and turn all night. In fact, the banking relationship was so strained the loan committee was considering cancelling the company’s loans and demanding payment in full.

These were bleak, hungry times for the business owners who, as business owners do, had everything invested in the business. A business failure meant not only bankruptcy for the business but very likely personal bankruptcy for the owners. Small business ownership is a high-stakes game.

The very air within the walls of this beleaguered business reeked of stress sweat and desperation. The business owners were standing at the edge with one foot already dangling over the precipice. One business consultant had already recommended bankruptcy. Bleakness. Hopelessness. Despair.

Flash forward three years.

I’m climbing a mountain with my iPhone in my backpack keeping track of my time and miles. I hear the little “ding” signifying a new email. Then, another little “ding.” When I get to the top of the mountain, I pull the phone out and check my messages. My client’s bankers have sent emails in response to the third quarter results I emailed earlier in the day. One read, “Congratulations! Keep it up!” The other said, “WOW!” I confess to doing a little Cash Flow Wizard jig on the top of that mountain. We’d come a long way to get there.

So, what made the difference, you ask? For my part, it was providing that steady hand on the financial tiller that every business needs. They call it Wizardry but it’s really just solid financial practices. The rest of the story of the turnaround belongs to the business owners who never said “Uncle,” the employees who did the magic they do every day, the bankers who hung in there, the vendors who valued their relationships and worked hard to help their customers, the tax accountant who went the extra mile to help, and the loyal band of customers that every business needs. You can call it magic, but its just good business.

Looking for your own Cash Flow miracle? How about a conversation with the Cash Flow Wizard? Let’s build a Dream Team!

Accountants: Teach Your Clients Well

Question mark over pile of moneyRecently, I spoke with a Certified Public Accountant about a mutual client. This CPA prepares the client’s tax return. I was helping the client overcome some serious cash flow problems. The CPA told me that he wants the client to use QuickBooks mostly as a checkbook and he, the CPA, will “take care of the rest.” Although I have a high level of respect for CPAs and the accounting profession as a whole, on this topic we definitely disagree.

Using QuickBooks as a checkbook means the business owner understands only the barest fundamentals of the financial side of running a business: deposits (money in) and checks (money out). The main reason businesses end up with cash flow problems is because of a lack of understanding and knowledge of finances on the part of the owner(s).

To my way of thinking, an accountant who doesn’t educate his or her clients is no different from a doctor who doesn’t educate his or her patients. Can you imagine a doctor who diagnoses a patient with diabetes and then says eat whatever you want and I’ll treat you when you eat yourself into a coma?

So many of the CPAs I have worked with seem to be on automatic pilot when it comes to educating their clients. It’s easier to clean up the messes, do the taxes, and take the check. This is a great disservice to the small business clients that are the bread and butter of not just the CPA firms but also the national economy.

Think about these statistics from the Small Business Administration:

There are over 27 million small businesses in the United States.

  • Those businesses generate most of the nation’s new jobs.
  • They employ more than half of the nation’s private sector jobs.
  • Most innovations spring from small businesses (think Jobs and Wozniak of Apple fame.)

With such a huge impact on the nation’s economy and on individual communities, it seems that having an educated small business owner is in the best interest of all involved. So why sell them short when it comes to understanding finances? Here are the top two reasons I hear from accounting professionals:

  • It’s much easier to just clean up behind a business owner than it is to try to educate him or her.
  • Business owners don’t want to pay for financial education.

Let’s debunk that first myth right away. It’s easier to change a toddler’s diaper than it is to potty train one. It’s easier to let the kids eat candy for breakfast. It’s easier to pass Jimmy on to the next grade than it is to teach him. Where does that mentality stop?

Now on to the second reason. Business owners don’t want to pay for financial education. As someone who has taught financial concepts to hundreds of business owners and future business owners, I can tell you the smart ones are willing to pay for good financial education. And I can also tell you that I’ve helped scores of business owners deal with cash flow issues and the only way out of that quagmire is through education. And they accept it willingly. The most common comment I get from business owners is “why didn’t anyone ever tell me that before?”

There is a two-fold responsibility here. First and foremost, business owners need to realize that a solid understanding and application of sound financial management is needed to create a successful business. And secondly, accountants and bankers need to learn to communicate more clearly the vital financial knowledge that can so vastly improve their clients’ success rates. Putting the two pieces together creates a strong partnership that leads to success for all involved.

Ready to get a better understanding of your finances? Get a complete small business financial education in a box.

The Economy is a Convenient Scapegoat for Small Business Woes

ScapegoatMain Street Vacancies on the Rise reads the headline in my hometown paper. One business closing, one business shutting down for the winter, empty buildings on Main Street. It’s a common tale these days. That darned economy is taking all the fun out of small business ownership.

The florist shop closes, citing competition from the new supermarket and people having to choose between gas money or flower money. The lobster restaurant shuts down for the winter claiming that the townspeople aren’t supporting them. They can only rely on the summer people.

The news isn’t all bad though, there on my favorite American Main Street. An existing supermarket is holding its own against the newcomer. A new art gallery has opened. A gift shop is expanding. The new movie theater and pub is holding its own. A beauty shop is adding booths. The Maine-owned discount store doubled its space and increased its offerings.

As an entrepreneur, the question that comes to my mind is always the same. Why? Why is one business closing while another expands? Why is one business able to compete while another is not? Why is one business supported by the locals and another is not?

In fact, asking why may be a business owner’s most important job function. Keep asking the question and you’re bound to get answers and more questions. What could the florist shop have done differently? Why is the gift shop able to expand? What are the owners of the new art gallery doing to draw in business? What can I do in my business to win over the locals, the summer people, other business owners? What other markets can I tap into to sell my product or service?

It’s easy to blame all small business woes on the economy but the truth of the matter is that many small businesses were struggling during the boom times. The economic doldrums may offer the final coup de grace, but the fatal problems were already there.

This is not a time for business-as-usual, particularly if business-as-usual wasn’t working to begin with. Weak businesses will fail in a bad economy. Strong businesses will seize opportunities, look for unfilled niches, and employ good marketing tactics to survive the tough economy.

Looking for street smart financial strategies to overcome cash flow woes? Learn the secrets of The Cash Flow Wizard:

Cash Flow Wizard’s Tips for Negotiating

Every ten years or so I am compelled to stroll on to the dangerous grounds of car dealerships. I’d rather never put my feet on that pavement because I know I will encounter people who try to separate me from the contents of my wallet. Then, I have all that trouble convincing them that my money is just that, MINE. IF they are going to get some of it, they’re going to have to work for it, just as I did.

Now, when your favorite Cash Flow Wizard strolls on to that pavement, I’m quite sure my demeanor sets the salespeople at ease. They’re thinking: middle-aged woman, arrives alone, very nice and friendly. Easy sale. We’ll appeal to her concern for safety; we’ll tell her she looks HOT in that car; we’ll get her a car in whatever pretty color she wants; we’ll make financing easy for her. Apply a little pressure. Presto! We have a sale.

That’s when the fun begins. For me, anyway. Don’t let my mild-mannered ways fool you. I’m a tough-minded negotiator. Before I ever set foot on the dealer’s pavement, I have already done my research. I know exactly what I want. I know exactly what I’m willing to finance. I know exactly what I’m willing to make as a downpayment. I don’t care what color the vehicle is as long as it’s not black or gray. I’m not swayed by emotion. I’m all business. The rest is up to the sales people. How much do they want my money?

The goal of a salesperson is to get the sale at the highest possible price the customer will allow. My goal is to get the purchase at the lowest possible price the seller will allow. If the item is scarce, the price is higher. If the item is plentiful and competition exists, the price is lower. In case you didn’t notice — it’s a buyer’s market. Lots of inventory, lots of competition. That’s fantastic for business owners in the market to buy, but not good for selling products and services.

Because of a tough selling market we have to really understand what our customers value and what our competitors are doing. If I, the customer, am standing on a car lot looking at a vehicle and I know I can drive an hour to stand on another lot where they have an identical vehicle, I, the customer, will be very aware that the seller should work hard to get my business. The old “I have another customer who is interested” kind of tactics no longer are effective.

The rough sales climate is good news for business owners who are purchasing goods or services. Because margins are tight on the sales side, we have to spend carefully and get the lowest prices possible on the purchasing side. In a buyer’s market, this is easier to do.

Here are some tips for negotiating a good deal:

  1. Do your research. Who sells what you want? Are there ten suppliers or one? What are your must-haves and your nice-to-haves? The more you know the more power you have.
  2. Set rock solid will-not parameters. For example, with my car purchase, I have a will-not-finance-more-than-$ parameter.
  3. Determine what constitutes a good deal or good price for your situation. If you’re buying materials for a job, what impact will spending 1% more on materials have on your profit picture?
  4. Hold firm to what you want. 
  5. Walk away if you don’t get what you want.
  6. Wait. The salespeople will come to you with a counteroffer or meet your price.

My other favorite tactic when dealing with car salespeople is to turn their tactics around on them. I say, “Here’s where you are, here’s where I am. Are you going to let $x stand in the way of selling me a car and getting your commission?” If you’re going to spend money, spend it well. It’s the Cash Flow Wizard way.

Want to become a Cash Flow Wizard like me? Get the Cash Flow Wizard in a Box. Get yours today because I have another business owner just waiting to buy it. You don’t want to miss out!

Swimming with the Sharks

Shark TankI’m a big fan of the television show Shark Tank (ABC, Friday at 9 p.m.) So much so that I schedule it on my calendar with an alert in case I forget. It’s one of only two television shows I regularly watch. If you’ve never seen the show, it’s a group of very financially successful entrepreneurs who are looking to invest in more businesses. An entrepreneur interested in finding an investor steps up and delivers a pitch to attract The Sharks to invest in his or her business. Why am I a fan? Quite simply, it’s the best business education you can get and it’s free! Free means no cash outlay … that in itself is enough to make The Cash Flow Wizard’s eyes well up with deep seated emotion.

When I teach college classes in accounting and entrepreneurship, I use Shark Tank as a teaching tool. My students enjoy it and beg for more. “Ms. Grimm, are we going to watch Shark Tank today?” Now, I’m no fool. I know they’d rather watch Shark Tank than listen to me lecture. When I let them watch Shark Tank, they think they’re getting away with something. What they don’t know is they’re learning amazing business lessons. (Don’t tell them there’s method to my madness!)

The biggest lesson that is driven into them over and over again is “Know Your Numbers.” Entrepreneur after entrepreneur jumps into the tank only to be torn to shreds by The Sharks who ask the hard questions. You see, The Sharks aren’t emotionally invested in your business like you are. They look at your business searching for strengths and weaknesses, opportunities and threats. They don’t care that you’re making jam from your Grandma Sally’s secret recipe that she taught you when you were four and she stood you up on a chair with an apron around your neck. What they want to know is can your business make money.
I watch my students grow in business wisdom each time they watch Shark Tank. We discuss which businesses we would invest in and why and which businesses are surprise successes. (A favorite is We were all amazed by that one.) By the end of a semester my students are openly scornful of entrepreneurs who walk into the Shark Tank unprepared. “Can you believe that guy didn’t even know his numbers?”

Unfortunately, “not knowing your numbers” is a common business problem. In fact, all those businesses I’ve been called in to help have had owners who didn’t know there numbers. It’s estimated that 80% of businesses that fail have owners who don’t understand the importance of cash flow and the financial side of running a business. The good news is those skills are completely learnable. And you don’t need to take out a college loan. Just watch a few episodes of Shark Tank.

If you want a fast and fun financial education, you can also read my books: Stop the Cash Flow Roller Coaster and Strength in Numbers. You get an entire real world financial education without having to listen to me lecture!

Proper Care and Feeding of the Business Owner

That sizzling sound you’re hearing may be a symptom of a major hidden cause of businesses closing their doors. It’s called burnout. And you may be its next victim.

Often, the last thing a business owner considers is his or her health and sanity. The burnout that results from overwork and stress can deliver a death blow to the very enterprise you’ve been giving your all to create. Setting a course for your business that includes the proper care and feeding of the business owner is a critical success factor in every business.

What is Burnout?

Burnout occurs after prolonged periods of stress and physical and/or mental fatigue. It leaves business owners feeling hopeless, powerless, cynical and resentful. It creates an atmosphere of failure, stagnation and reduced productivity. Burnout carries throughout your business showing up in your relationships with your clients and employees and ultimately impacting your bottom line and the growth pattern of your business.

Typically, burnout occurs in situations where you feel:

• overworked
• like no one understands what you’re going through
• confused about priorities and direction
• resentful about tasks that you don’t feel rewarded for performing
• concerned about financial survival and security
• overwhelmed

In short, self employment and burnout go together like salt and pepper, peanut butter and jelly, and Donald Trump and real estate. The result is often a very unhappy, unfulfilled business owner who finally decides to throw in the towel and get a nice, simple 40-hour-a-week job.

How Do You Prevent Burnout?

Recognizing that burnout is a serious threat to the survival of your business is a critical step in preventing or bouncing back from burnout. Burnout steals your passion — the very passion that motivated you to start your business. Without that passion, your ability and willingness to do whatever it takes to make your business a success quickly diminishes. You find yourself resenting your customers instead of wanting to help them. You dislike your employees because of their constant demands. You snap at your spouse when asked how your day went. And you constantly feel pressured and unable to relax.

Understand that you have two roles in your business. You need to play both the role of employer and the role of employee. If you worked for an employer who expected you to work non-stop, never allowing time off, paying you far less than you’re worth with no benefits, you’d soon have your resume updated and be out the door. And yet, that is the daily reality for many small business owners.

Remember, you are your employer. Are you creating a work environment of tyranny and maltreatment? Treat your help like you would want to be treated by incorporating benefits like flex time, comp time, and regular time off. Review a list of job duties to see if it’s a fair and logical distribution of work. You need to take care of the talent just as you would if you had actual employees. Your business depends on your health and sanity.

Preventing burnout is a critical piece of your business plan. How will you keep yourself fresh and engaged with your business? What do you need to do to keep yourself from becoming overwhelmed? What tasks are overwhelming you? Develop a plan to outsource those tasks or find easier ways to do them. What adjustments do you need to make in your business so you can take regular time off?

Often business owners insist they can’t take time off and can’t afford to hire help. Regardless of where your business is today, as the owner of the business, you have the power to chart the course of your business. If you feel you can’t step away as things stand right now, begin to plan a direction for your business that will allow you to do so in the future.

If you’re looking for a confidential, trusted advisor to give you apply-it-now practical advice for your business, learn more about my consulting service and choose the consulting package that fits your business and budget at