Get out of financial trouble

I mentioned last week that our cash flows were heading in the wrong direction.
At Monday’s management meeting Bonnie presented me with an up to date “mother of all spreadsheets” (MOAS – that’s what we call it), showing a £50,000 deficit in cash flow before 31st December 2006.
Given that one of my principle goals for 2006 is to finish the year business debt-free, this is not good news.
How has it happened?
Simple enough:

  1. Sales Year To Date (YTD) are lower than expected (January to April – New Dental Contract Angst, April to June – New Dental Contract panic, June to August – sod it – the sun’s out, let’s have a BBQ);
  2. Expenses YTD to higher than expected – largely because I have invested in Team CB and in systems.

As I keep saying – a 14-year old could run the cash flows – it’s not rocket science.
So my weekend was overshadowed by a small dose of Fantasy Expressed As Reality (FEAR) – imagining that the company would go broke and I’d be busking through the winter months outside a local cinema with a banjo and a dog with three legs. Actually, I could borrow my mother’s cat – it has three legs and is called “tripod” – that would get the sympathy vote.
Monday arrives and I default into my crisis management mode:

  1. Identify the problem – we are short of cash;
  2. Quantify the problem – we are short of £50,000 on these planning assumptions;
  3. Identify the solution – increase prices? No. Increase sales? Yes. Reduce expenses? Yes. Increase services? Yes.
  4. Quantify the solution – yesterday we spent the morning looking at cost cutting and deferring non-essential expenditure – that saved me £20,000 in about 2 hours. Some tough decisions but necessary. In the afternoon we worked through our prospective new client (PNC) list and identified the best use of Paul’s time in the next 6 weeks. I have a call-in day today but during the rest of this week I will be discussing with Team CB the provision of additional events, products and services to increase our sales by £30,000 before the year end.

By the end of the meeting the FEAR had been eliminated and we are busy focusing on a PLAN of action to rectify the situation – before it becomes a problem.
I wish more of my clients were so diligent in their financial management.
Maybe I am so diligent because I went bust in 1993 and vowed it would never happen again.
I also know it’s not just me – a client of mine went off on holiday last weekend after reporting profits of £19,000 in July, against a target of £50,000. The reason? Sales were down. No doubt he will be sat on a beach right now, planning his return – that’s what we entreprenuers do you know.
Anyone who owns a small business knows that it’s a roller coaster ride and, in the words of one of my first sales managers, Barry Woolley:

You will spend 10% of your time elated, 10% of your time suicidal and the other 80% either too busy or too tired to know how you feel. When you are elated, celebrate, when you are suicidal, make sure you have an inner-circle of team members and advisors who can guide you through.”

Activity is the key – take action – now!
I love my MOAS, I love my Team and I love my circle of advisors – without them I would spend my whole life in FEAR.


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Chris Barrow

Chris Barrow has been active as a consultant, trainer and coach to the UK dental profession for over 20 years. As a writer, his blog enjoys a strong following and he is a regular contributor to the dental press. Naturally direct, assertive and determined, he has the ability to reach conclusions quickly, as well as the sharp reflexes and lightness of touch to innovate, change tack and push boundaries. In 2014 he appeared as a “castaway” in the first season of the popular reality TV show “The Island with Bear Grylls”. His main professional focus is as Coach Barrow, providing coaching and mentorship to independent dentistry.