On The Mats – Focus On Cash One Hour a Week
If you’re a business owner, did you know it only takes one hour a week to go and generate a whole heap of cash? Let me show you how.
Hi guys, Nathan McDonald here for another On the Mats episode and I hope everyone has been well. I know we’re all busy here at Black Belt Business helping those business owners grow and get what they want to out of the business. And today I’m going to talk to you about cash. For one hour a week, you can generate as much cash as you need. Let me explain why.
First of all, you’re in business for two tangible results – and there are only two tangible results of business. What are they? They are time and [then there’s] cash, and effectively, they are the only things that you can actually monitor or be able to track on what business does for you. Yeah, yeah – you can go all about how you love what you do and it’s great to get up in the morning because you’re dealing with the things that you love, but if you’re not a charity, then effectively you’ve got to focus on the cash; it’s very important as a business owner to do that. On time – we can talk about that in another episode, but today I just want to talk to you about cash, and I want to give you a couple of clear points on what you can do in an hour every single week to make sure you get heaps of cash.
1 – Focus On Cash for An Hour Each Week
So one of the first points is – what I do with clients is I make sure they book an hour in their diary every single week to ensure that they’re just focusing on their cash. Now, one of the first things that we do is look at cash flow forecasts: what is it that my cash looks like over the next 3 to 4 weeks? Who is going to pay, what customers are going to pay, what money do I need to pay out, how much money will I have in the bank account in 3 or 4 weeks’ time? Because what you can do with that is go, ‘Ooh! I may not have enough’ and you can either put some of your creditors on hold or you can actually chase up some more debtors or you can do something about it. It’s no good waiting until 3 or 4 weeks’ time and going, ‘oh, I’ve got no money in the bank account to pay anyone! Oh no!’ What you can do within that hour a week is actually see where your cash position is.
2 – Manage Your Bank Accounts
The second thing you can do in that hour a week is just manage your bank accounts. We recommend 4 bank accounts in total from a business perspective: a profit account, a rainy day account, a general account, and your taxes account. So you actually put stuff away, and every time someone pays you during that hour a week you can go, ‘Great, this is how much money is in my bank account. Do I need to re-stock up my rainy day account? Can I put some of that money into my profit account or do I need to actually allocate the taxes account and go from there?’ So within that hour you can actually go and do the allocations accordingly, and of course, you don’t touch any of those accounts unless you really, really need to – and reality is, you’ll not need to do that because [if you] go back to point 1 your cash flow forecast will tell you that you need to do that rather than just doing it adhocly.
3 – Profit and Loss vs. Your Budget
Now the other point that we want to look at is looking at your profit and loss versus your budget. In that hour a week you can quickly run a report out of your accounting software, or whatever software you’re doing to manage your accounts, and go, ‘Right, is my budget on track? Am I on track for sales? Am I on track for my budget for the expenses that I’m actually paying out?’ and what you can do during the month is actually fix those things. A lot of business owners will wait until the end of the month and go, ‘Oh, well my sales target is X, but I only got to Y’ and then go, ‘damn’. Well, that’s too late. At least if you did that in that hour a week you would be able to identify exactly where you are at and then what you need to achieve to actually go to that next step or to get those targets in place.
4 – Chase Down Debtors
The next point you may actually sit there and go [say] you already do – but reality is, I like to actually chase debtors in this time. Have a look at your debtors. Was it worse or less than the last time? What about people in 60 or 90 days? What you can do is chase those people up. I know it sounds really, really common sense on what I’m saying here, but it’s amazing on how many business owners don’t take the time to do it and wait until their cash is in a problem and then go, ‘Oh, I’d better go chase up my debtors’ and people who hadn’t paid for 90 days – guess what? They’re going to be a lot harder to get it out of. At least if you chase them up once a week and have those rules in place you will find it a lot easier to get your cash in.
5 – Make Sure Invoicing is Correct
And here is another good point: I had a client who actually turned around and went ‘Oops! For the last year I’ve been invoicing my clients incorrectly. I actually put a newer service agreement in but I forgot to change my accounting software in terms of invoicing.’ So in that one hour a week what you could do is focus and ensure that your invoicing is correct. You can do mini-audits on your invoicing. You can have a look if there are any jobs that need to be billed out now instead of waiting until the end of the month or instead of the new month. And what you can do is really focus on having a look on what’s happening from an invoicing point of view to make sure you can actually see what’s happening with your cash. So, you know – some really simple things there to actually get moving forward and chase up to make sure your invoicing is working.
6 – Refocus On Your Cash
And the last point that I want to talk to you about – and I think this is a very, very important point: that one hour a week will help you refocus every time. How often do we wake up in the morning and go, ‘Yay! It’s another earn-the-cash day!’ No, most people wake up and sit there and go, ‘Yay. I’m back at work. Oh my goodness; I’ve got this to do, I’ve got this to do, I’ve got this to do.’ Well, the end result is going to be the cash, so imagine getting out of bed and going, ‘Yay!’ And that one hour a week can help you refocus on your cash. It can really help you go, ‘you know what? I’m in business to actually generate some money’. So it’s really important that you actually take time to spend that one hour a week reworking on your cash – looking at it, looking at what needs to be done, the strategies that need to be done to bring in more and do that during that one hour a week.
So guys, I know it’s been really, really simple and I know a lot of this is stuff that you already know, but how often do you do that? Have you got set times that you can actually go and refocus back on your cash? So now it’s time to actually go put this in place, guys. Get that one hour a week, make it the same all the time, and go and have a look on what you need to do to go and generate some more cash.
Well, that’s it for another On the Mats episode. My name is Nathan McDonald from Black Belt Business and I hope you really got something out of it, and don’t forget to like us on Facebook. And if you are looking for a one-to-one session with someone at Black Belt Business here we are happy to help. We will kick your butt in terms of getting your business cranking, and that’s what we’re all about: making sure your business is succeeding.
So, guys don’t forget. I’m an Aussie, my message is global, and my business is your passion – my passion, your passion, anyone’s passion! All right guys, bye for now and have a great day.