Ca$h Flow  The Lifebloodof Your Business Infrastructure, Cash Flow     & Corporate Health   Chris James   Partner   B2B CF...
Cash… the LifebloodWhat’s Your Pulse?
Unofficial Organization Chart• Finders – owners, future  thinkers, relationship builders,  risk takers• Minders – historic...
4 Stages of Cash               Stage 1: Infrastructure Creation         Owner’s Activities•   Building relationships with ...
Stage 2: Infrastructure PeakThe result of Infrastructure Creation is Infrastructure Peak•    Few customer complaints•    H...
Stage 3: OutgrowthResult of running lean is burn-out of owner and employees  Attitudes change, owner thinks:    •    “I sh...
Needs Change During               Outgrowth PhaseHeightened Need For Infrastructure       •   Cash Flow Forecasting, Budge...
During Outgrowth                  Needs of a Finder ChangeFOCUS ON THE PAST               FOCUS ON THE FUTURE• Historical ...
Business Styles         PRO-ACTIVE                   RE-ACTIVE    you drive the business     the business drives you•   We...
Re-Active Organizations•Lack of appropriate infrastructure•Cash problems•Fire fighting mentality•Long Hours•Customer Servi...
The Result ?        The Danger ZoneThe Danger Zone is created when the cash needs of your company far exceed the cash avai...
Danger Zone                 Potential Outcome•   Loss of current and future customers & vendors•   Damaged business relati...
Avoiding the Danger Zone• Leave Minding activities  to other capable persons• Weekly Status reporting     (keep your finge...
Rescuing the Finder            from The Danger Zone• Stop trying to solve all the problems• Rely on others for Minding   –...
Reports for Finders                 Forward looking                          Sales by Month                               ...
Reports for Finders   Ca$h Flow Model
Cash Flow Forecast                  Why Companies Fail                    Cash Out exceeds Cash In                Finder i...
The EconomyDanger Signs   •   Prompt payers begin to slow   •   Orders decrease   •   Bad Debt will increase   •   Surpris...
Survival & Growth•   Surround Yourself With Talent and Information         •   CEO & Business Roundtables         •   Flas...
Chris James      Partner   972.955.5743cjames@b2bcfo.com  www.b2bcfo.com
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Ca$h Flow The Pulse - Chris James

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Chris James a partner with B2B CFO. He talks about Cash Flow and how this is the pulse and lifeblood of any business.

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Ca$h Flow The Pulse - Chris James

  1. 1. Ca$h Flow The Lifebloodof Your Business Infrastructure, Cash Flow & Corporate Health Chris James Partner B2B CFO® 972.955.5743
  2. 2. Cash… the LifebloodWhat’s Your Pulse?
  3. 3. Unofficial Organization Chart• Finders – owners, future thinkers, relationship builders, risk takers• Minders – historical view, lives in past, desires order, resists change• Grinders – live for today, non-dreamer, non-delegator, the doer
  4. 4. 4 Stages of Cash Stage 1: Infrastructure Creation Owner’s Activities• Building relationships with customers• Creating relationships with vendors• Delegating tasks to employees or associates• Causing sales and cash to come into the company
  5. 5. Stage 2: Infrastructure PeakThe result of Infrastructure Creation is Infrastructure Peak• Few customer complaints• High customer service• Low overhead• Company runs “lean and mean”• Short cash collection cycles• Personal sacrifice by the Finder
  6. 6. Stage 3: OutgrowthResult of running lean is burn-out of owner and employees Attitudes change, owner thinks: • “I should have a raise” • “We need more people so we can take time off” • “We need a better building” • “I need a new car/house/vacation……” • “We should buy more equipment or inventory”
  7. 7. Needs Change During Outgrowth PhaseHeightened Need For Infrastructure • Cash Flow Forecasting, Budgets, Goals • Expense Control • Policies and Procedures • Employee Training • Management Expertise • Planning – to Avoid “The Danger Zone”
  8. 8. During Outgrowth Needs of a Finder ChangeFOCUS ON THE PAST FOCUS ON THE FUTURE• Historical reports should • New Tools are Needed to be used to identify Ensure Financial Stability • Trends & Growth • Baseline (KPI’s) •Budgets • Areas for •Cash Flow visibility improvement •Strategic Planning •Experienced Managers •Flash Report The Finder is a visionary who knows that yesterday cannot be changed, focus is on the future while applying the knowledge gained in the past
  9. 9. Business Styles PRO-ACTIVE RE-ACTIVE you drive the business the business drives you• Weekly Flash • Poor Visibility• Cash Flow Visibility • Putting Out Fires• Process Improvement • Lack of infrastructure• Creating opportunities • Long hours• Setting goals • Lack of clear goals What’s Your Pulse?
  10. 10. Re-Active Organizations•Lack of appropriate infrastructure•Cash problems•Fire fighting mentality•Long Hours•Customer Service problems•Lack of goals•Frustration sets in Due to these issues and staff limitations …the Finder shifts towards being a Minder, Working IN the business rather than ON the business
  11. 11. The Result ? The Danger ZoneThe Danger Zone is created when the cash needs of your company far exceed the cash available to meet those needs
  12. 12. Danger Zone Potential Outcome• Loss of current and future customers & vendors• Damaged business relationships• Lost enthusiasm or energy of the Finder• Damaged relationships with family members• Death of the dream of the founder• Death of the company
  13. 13. Avoiding the Danger Zone• Leave Minding activities to other capable persons• Weekly Status reporting (keep your finger on the pulse)• Timely and Accurate financials• Sales or cash? – let others find the cash, Finders need to generate sales with good margins & set goals
  14. 14. Rescuing the Finder from The Danger Zone• Stop trying to solve all the problems• Rely on others for Minding – Find someone who is good at it – Bring in someone the Finder can trust• Return the focus to finding new customers• Refocus on product and market factors• Create a reporting system that measures the Pulse of the business – Meaningful financial and performance reports – not Quickbooks/Peachtree standard formats
  15. 15. Reports for Finders Forward looking Sales by Month Dashboard 300000 250000 200000 PlanSales 150000 Actual 100000 50000 0 1 2 3 4 Period Analytics Sales per Employee Plan per EE Actual per EE6,0005,0004,0003,0002,000 1 2 3 4 Period
  16. 16. Reports for Finders Ca$h Flow Model
  17. 17. Cash Flow Forecast Why Companies Fail Cash Out exceeds Cash In Finder is drawn into Minder duties The plan was to grow but lack of planning results in: Poor Management Overspending Surprises Firefighting slow vendor payments & time spent seeking new vendors poor morale turnover poor collections poor customer service loss of customers FORECASTING alerts you to possible future problems and allows time to: •investigate alternatives & take action •find additional funding •improve performance •Survive & Grow
  18. 18. The EconomyDanger Signs • Prompt payers begin to slow • Orders decrease • Bad Debt will increase • Surprise order from new customer (prior vendor shut them off due to non-payment) • Employee Fraud increasesPlanning • take advantage of the 2008 Economic Stimulus Package to reduce tax liability • run Lean, cut costs now • surround yourself with experienced advisors • know your cash balance and projected cash balance • "In a true crisis you are managing cash, not managing the numbers… In a turnaround situation, there is no cost that is fixed." - Bettina Whyte, Advisory Board Chairman, Bridge Associates
  19. 19. Survival & Growth• Surround Yourself With Talent and Information • CEO & Business Roundtables • Flash Reports • Budget vs. Actual reporting • Seasoned professionals you can trust • Forward looking (realistic) projections• Identify & Take Action • Company Strengths and Weaknesses SWOT Analysis • Employee Strengths and Weaknesses let competitors hire your weak employees • Customer Strengths and Weaknesses will they weather the storm • Vendor Strengths and Weaknesses establish 2nd sources• Be a Finder • Build an infrastructure that allows you to be a Finder • Find the right Minders • Visit customers, maintain excellent relations • Impart your vision to the staff • celebrate successes and keep your finger on the PULSE
  20. 20. Chris James Partner 972.955.5743cjames@b2bcfo.com www.b2bcfo.com

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