March 10, 2025 • 15 mins
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Where’s your cash going? Even thriving businesses can feel stuck when money flows in and out without clarity.
In this episode, Steve Coughran reveals why cash flow confusion isn’t your fault — and how to fix it. Learn the key steps to forecasting, managing, and boosting your cash flow so you can stay in control and grow with confidence.
Disclaimer:
BYFIQ, LLC is a wholly owned entity of Coltivar Group, LLC. The views expressed here are those of the individual Coltivar Group, LLC (“Coltivar”) personnel quoted and are not the views of Coltivar or its affiliates. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, Coltivar has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
You just can't stay stuck there.
That's the key.
You can't stay stuck, and Icould tell you businesses that
have struggled once before, thatwere like on the brink of
bankruptcy, have turned aroundwhen they start paying attention
to the right things.
This is Boosting your FinancialIQ, where I help business
professionals with financialresponsibility to elevate their
careers and run profitablecompanies.
(00:21):
My hope is that you'll applythese lessons to achieve your
greatest ambitions, cheers andenjoy.
If you're running a business,do you ever feel like you have a
ton of cash coming in, a lot ofmoney going out, and you're
stuck in the middle wonderingwhere the heck is it all going?
If so, you're not alone.
I've been in that exactposition before and I could tell
you a lot of other businessowners struggle with this
(00:43):
concept of cashflow before, andI could tell you a lot of other
business owners struggle withthis concept of cashflow.
So today we're going to talkabout cashflow, how to forecast
it, how to manage it and how toget more of it.
But here's the deal.
Let me just say this If youstruggle with cashflow, it's not
your fault.
Even if you have a businessdegree and you studied
accounting and finance.
It's still not your fault.
Even if you have an accountingteam or you work with a CPA or a
(01:06):
bookkeeper, if you don'tunderstand cashflow, it's still
not your fault, and here's thereason why Number one schools do
a terrible job teaching aboutcashflow.
I know this because I have myundergraduate in accounting and
finance.
I have my CPA.
I did my master's inaccountancy.
I did my MBA with an emphasisin finance and strategy.
I know I'm a slow learner or Ilike books or something I don't
(01:29):
know what it is, but despite allthis, I could tell you that I
can count on my hand the numberof times I've come across
somebody in my life who trulyunderstands free cashflow and
most CPAs.
I'm a CPA, but I can tell youmost CPAs they focus on profit
or taxes and they don't reallypay attention to free cashflow.
(01:49):
So today we're going to jumpinto it and you're going to
leave this episode feeling somuch more confident because
we're going to break everythingdown and I'm going to make it
really simple.
All right, so let's just talkabout the high level definition
of free cashflow.
Ultimately, it's the amount ofcash that's left over in your
business After you pay all theexpenses.
You account for working capitaland capital expenditures I'm
going to talk about that heremore in a minute and it's the
(02:12):
amount of cash that's left overto do three things to pay down
debt, to return to equityproviders or to reinvest in your
business.
Now, the breakdown doesn't haveto be that complicated, but I'm
going to walk you through it soyou understand how to derive it
from your financial statements.
If we begin with the incomestatement and you start with the
top line, you have revenue thatrepresents all the income that
(02:32):
the business generates fromselling its products and
services.
Then, if you subtract out costof revenue, you arrive at gross
profit.
Now, what's in cost of revenue?
You may have direct labor,material costs, subcontractors
or any other direct or indirectcosts associated with fulfilling
your product or service to yourcustomers.
All right.
(02:53):
So revenue minus cost ofrevenue, we arrive at gross
profit.
But we're not done yet, becausewe also have to account for
operating expenses.
Operating expenses have threemain categories sales and
marketing, general, andadministrative and research and
development.
Combine those three together,you get operating expense, also
known as OPEX for short, if youwant to sound cool.
(03:13):
And if you take gross profitminus OPEX, you arrive at EBITDA
.
Ebitda is just a nerdy way ofsaying profit.
It stands for earnings beforeinterest taxes, depreciation and
amortization.
And I'll tell you here why weexclude interest taxes,
depreciation and amortization,because that's what EBITDA is
it's profit, excluding thosethings.
(03:34):
Number one you ignore interestbecause we don't want to account
for the capital structure of abusiness.
So one business may have a lotof debt, whereas another
business may have a lot ofequity.
So when we want to compareprofit, apples to apples from
one company to the next, ebitdais a great way to do it because
it excludes interest, right.
The same thing is true withtaxes.
(03:54):
There are a lot of nuances whenit comes to taxes with
businesses.
Some may have tax credits orlost carry forwards, et cetera.
So we're just going to excludetaxes so we could look at
businesses on an apples toapples basis, all right for now,
and then with depreciation andamortization.
The reason why we excluded atthe EBITDA level is because we
can compare companies withoutregards to how they invest in
(04:18):
property, plant and equipmentand the methods they use to
depreciate or amortize thatproperty, plant and equipment.
All right, so we end up withEBITDA, and this is where most
companies stop and in fact thisis where a lot of forecasts stop
.
They stop at EBITDA, thisprofit line right, or some
variation of EBITDA, andbusiness owners are like, okay,
(04:38):
we're good, we know what ourEBITDA is and therefore we can
run the business effectively.
Wrong, because at EBITDA westill have to keep going.
Ultimately, we subtract outdepreciation and amortization
for tax purposes.
Then that leaves us with EBIT,e-b-i-t.
We took out the DA in EBITDA.
Right, because for depreciationand amortization, although
(04:59):
they're a non-cash item, theyare tax deductible and we have
to get down to our net operatingprofit after tax.
So we have to subtract it fromEBITDA.
Then we're left with EBIT.
Like I said, we account fortaxes and then we're left with
net operating profit after tax.
Nopat, we're not done yet,though.
We add back depreciation andamortization because, like I
(05:20):
said, they're non-cash items andwe're trying to get to cashflow
, so we add them back to notepad.
Then we account for changes inworking capital and essentially,
changes in working capital isthe difference between your
current assets and your currentliabilities from one period to
the next.
And this is where a lot ofcompanies get tripped up,
especially in their forecast,because it's really hard to
(05:41):
forecast current assets andcurrent liabilities.
More on that here in just aminute.
But also we have to account forcapital expenditures, capex.
So you take NOPAT, add backdepreciation and amortization,
account for changes in workingcapital, subtract out capital
expenditures in other words,investments and property plan
equipment and bingo, we justarrived at free cashflow.
(06:05):
So I know I went through thatpretty fast.
If you want to learn more aboutthis, by the way, I have a free
program at boosting yourfinancial IQ byfiqcom.
In fact, you could take it.
It's called the financial pro.
It's totally free, it's over ahundred video lessons and there
are no gimmicks.
You just go there, you sign up,you can learn from an app, you
can learn from your computer,you can learn from anywhere in
(06:28):
the world, and it's all free,zero dollars.
Okay.
So check that out if you wantto learn more about this
breakdown and you want to see itvisually.
But nonetheless, I just walkedyou through free cashflow.
Let's talk about forecasting.
Okay, because forecasting isreally important, because it'll
help you to understand wherethings are going into the future
.
Right now, I'm looking at anactual forecast that we built
(06:50):
for one of our clients, and it'sreally cool because we don't
just stop at the incomestatement.
This is where a lot offorecasts stop for companies.
They just build an incomestatement forecast.
They have revenue, they havetheir expenses, then they have
profit and they're like cool,we're good.
Well, we don't stop there,because then we account for
changes in working capital andCapEx.
(07:11):
Those are items that you cancalculate based on the balance
sheet, if you build out abalance sheet forecast as well.
Like I said, most companiesdon't do this.
They just have an incomestatement forecast and I like to
combine a balance sheetforecast as well so you can get
down to free cash flow, becausethat's what it comes down to.
All right Now, in an idealworld, it'd be great if
(07:31):
companies also include aforecast for the statement of
cash flows, but oftentimesthat's just too challenging.
Most companies don't evengenerate a statement of cash
flows because it's so nuanced,which is fine.
But if you have a forecastedincome statement and a balance
sheet, then you can get the freecashflow and that's what's most
important.
All right.
(07:52):
So when it comes to forecasting,and especially forecasting
working capital, there arereally three main accounts you
have to pay attention toaccounts receivable the amount
of money customers owe you,right.
So if you're extending creditto your customers in other words
, you go out there and performwork and then you say, hey, pay
me in 30 days.
That balance that accumulatesfrom your customers is called
(08:14):
accounts receivable AR, and thatsits on the balance sheet under
current assets.
The next account is inventory.
So if you're buying inventory,stockpiling inventory and you're
accounting for inventory,that's going to show up under
current assets as well and thenunder current liabilities.
The biggest account is accountspayable.
This is the amount of money youowe your vendors if they extend
you credit.
So if you go buy supplies andput it on account and you pay
(08:37):
them in 30, 60 days or whateverit is, then you're going to be
racking up accounts payable.
So when you're forecasting outworking capital, there's some
other accounts that are combinedin current assets and current
liabilities.
But your three main accounts toforecast and to get right, like
I said, are accounts receivable, inventory and accounts payable
(08:59):
.
The reason why cashflow is sohard to forecast is because of
these three accounts.
Because guess what, as abusiness, what accounts do you
actually control?
You don't really controlrevenue.
That's up to your customers.
You can control cost that's upto your customers.
You can control cost that's upto you.
You get to control the cost foryour business.
But then, when it comes toaccounts receivable, sure you
can set terms on when customerspay you, but customers
(09:20):
ultimately have the final say ofwhen they're going to cut you a
check.
So trying to forecast thatbehavior can be really difficult
.
You may have 30 day terms and acustomer turns around a payment
in 10 days.
Or you have 30 day terms and acustomer pays you in 45 days,
and they're naughty right,they're rebellious, they don't
follow your accounts receivablepolicy.
With inventory you can plan forthat a little bit easier to
(09:40):
forecast, but still it could bechallenging.
And then accounts payable youcan plan that because you could
choose when to release paymentsto your vendors.
But accounts receivable, that'sreally the challenge of
forecasting for cashflow.
But I'll tell you this when youbuild a balance sheet forecast,
I would do accounts receivableand forecast it in days of
(10:01):
revenue.
I would forecast inventory daysof cost of goods sold, because
inventory is more related tocost of goods sold rather than
revenue.
In accounts payable, I wouldalso forecast that as days to
cost of goods sold rather thanrevenue and accounts payable I
would also forecast that as daysof cost of goods sold.
All right, so those are thethree main components of working
capital and then capitalexpenditures.
You can plan for those.
If you're going to go buy atruck or a tractor or invest in
(10:23):
a building, whatever it is, yourproperty, plant, equipment you
could build a schedule for that.
Not as difficult to forecast,for it's just your working
capital that's going to be thebiggest culprit, assuming that
you do a good job up above inrevenue and your costs, et
cetera.
But looking at this forecastright here for this client, I
always tell them look, if I showyou having $120,000 in positive
(10:45):
cashflow, we may be off by, youknow, 20 or $30,000 because of
those swings that I was justtalking about.
But looking forward, it's notabout precision on a
month-to-month basis.
Now, of course we wanna beaccurate, but you're not gonna
know five months out whetheryou're gonna have $120,000 in
positive cashflow or whetherit's gonna be 119 or 118.
(11:08):
It's impossible to forecastwith that type of precision.
However, if I can build out, atleast I know in five months
that we'll roughly have $100,000in positive cash flow, versus
having no visibility whatsoeverin what the future holds.
So close enough is good enoughwhen it comes to cash flow
(11:28):
forecasting, but at least havevisibility into what the numbers
may look like, because I couldtell you, if you look out into
the future and you have negativecash flow of $300,000, you got
a major problem.
Even if it's not $300,000exactly, maybe it's 250, that's
still a problem.
So understanding cashflow andforecasting for it can be very
valuable in building it outmonth by month and making it
(11:51):
rolling is really, reallyimportant.
Now, when it comes to managingcashflow, there are levers you
could pull.
Number one you could do morevolume.
Number two you could do morevolume.
Number two you can influenceyour price.
Number three you can reduceyour cost of goods sold.
Number four you can manage youroverhead, your op-ex.
We talked about working capitaland capital expenditures.
(12:12):
You can manage your risk, andthen you could also put in place
a strategy to drive all of thisAll right.
So, when it comes to managingyour cashflow, those are the
seven levers that we helpcompanies to understand and to
pull on a regular basis toimprove the performance of their
business.
So how do you get more of it Ifyou want more cashflow?
(12:33):
That's where it comes down tostrategy.
So I talk about strategy allthe time how businesses can have
a really good strategy to drivehigher cash flows.
Now, strategy isn't all aboutgenerating more profit or more
cash flow.
Instead, high profit and highcash flow is the result of a
good strategy.
So when you have a strategy,you have to determine where
(12:55):
you're going to compete, howyou're going to compete and,
ultimately, how you're going towin.
And when you can determine allthis and you have a solid
strategy that you implement withyour company and you review it
on a regular basis, that's wherethe magic happens.
So that's what I wanted to talkabout today is cashflow.
And, like I said at thebeginning, if you struggle with
cashflow, you're not alone.
It's not your fault.
(13:15):
A ton of people struggle withcashflow.
You just can't stay stuck there.
That's the key.
You can't stay stuck becausethere are tools, there are
resources to help you out, and Icould tell you businesses that
have struggled once before, thatwere like on the brink of
bankruptcy, have turned aroundwhen they start paying attention
to the right things.
All right, that's what I'llleave you with today.
(13:37):
If you want to talk more aboutthis, you could always reach out
at Coltivar.
com.
I'd love to talk to you moreabout your strategy and about
improving cashflow.
I also just released a book.
It should be out on all theplatforms on Amazon, audible, et
cetera.
If you want to check that out,it's called cashflow, and I go
into more details on all thisstuff right now, as of the date
(13:58):
of this recording, this maychange in the future, so if this
changes, don't get mad at me.
But right now you can getcashflow for free by going to
Coltivar.
com.
All you have to do is pay forthe shipping and handling.
If you live in the continentalUS, I'll cover everything else
the cost of the book, theprinting, et cetera and that's
my gift to you.
If you want to check that out.
Like I said, in the future, ifthis offer goes away, don't get
(14:20):
mad at me.
You have to act now.
All right, have a great weekand until next episode, take
care of yourself.
Cheers.
You just can't stay stuck there.
That's the key.
You can't stay stuck, and Icould tell you businesses that
have struggled once before, thatwere like on the brink of
bankruptcy, have turned aroundwhen they start paying attention
to the right things.
This is Boosting your FinancialIQ, where I help business
professionals with financialresponsibility to elevate their
careers and run profitablecompanies.
(00:21):
My hope is that you'll applythese lessons to achieve your
greatest ambitions, cheers andenjoy.
If you're running a business,do you ever feel like you have a
ton of cash coming in, a lot ofmoney going out, and you're
stuck in the middle wonderingwhere the heck is it all going?
If so, you're not alone.
I've been in that exactposition before and I could tell
you a lot of other businessowners struggle with this
(00:43):
concept of cashflow before, andI could tell you a lot of other
business owners struggle withthis concept of cashflow.
So today we're going to talkabout cashflow, how to forecast
it, how to manage it and how toget more of it.
But here's the deal.
Let me just say this If youstruggle with cashflow, it's not
your fault.
Even if you have a businessdegree and you studied
accounting and finance.
It's still not your fault.
Even if you have an accountingteam or you work with a CPA or a
(01:06):
bookkeeper, if you don'tunderstand cashflow, it's still
not your fault, and here's thereason why Number one schools do
a terrible job teaching aboutcashflow.
I know this because I have myundergraduate in accounting and
finance.
I have my CPA.
I did my master's inaccountancy.
I did my MBA with an emphasisin finance and strategy.
I know I'm a slow learner or Ilike books or something I don't
(01:29):
know what it is, but despite allthis, I could tell you that I
can count on my hand the numberof times I've come across
somebody in my life who trulyunderstands free cashflow and
most CPAs.
I'm a CPA, but I can tell youmost CPAs they focus on profit
or taxes and they don't reallypay attention to free cashflow.
(01:49):
So today we're going to jumpinto it and you're going to
leave this episode feeling somuch more confident because
we're going to break everythingdown and I'm going to make it
really simple.
All right, so let's just talkabout the high level definition
of free cashflow.
Ultimately, it's the amount ofcash that's left over in your
business After you pay all theexpenses.
You account for working capitaland capital expenditures I'm
going to talk about that heremore in a minute and it's the
(02:12):
amount of cash that's left overto do three things to pay down
debt, to return to equityproviders or to reinvest in your
business.
Now, the breakdown doesn't haveto be that complicated, but I'm
going to walk you through it soyou understand how to derive it
from your financial statements.
If we begin with the incomestatement and you start with the
top line, you have revenue thatrepresents all the income that
(02:32):
the business generates fromselling its products and
services.
Then, if you subtract out costof revenue, you arrive at gross
profit.
Now, what's in cost of revenue?
You may have direct labor,material costs, subcontractors
or any other direct or indirectcosts associated with fulfilling
your product or service to yourcustomers.
All right.
(02:53):
So revenue minus cost ofrevenue, we arrive at gross
profit.
But we're not done yet, becausewe also have to account for
operating expenses.
Operating expenses have threemain categories sales and
marketing, general, andadministrative and research and
development.
Combine those three together,you get operating expense, also
known as OPEX for short, if youwant to sound cool.
(03:13):
And if you take gross profitminus OPEX, you arrive at EBITDA
.
Ebitda is just a nerdy way ofsaying profit.
It stands for earnings beforeinterest taxes, depreciation and
amortization.
And I'll tell you here why weexclude interest taxes,
depreciation and amortization,because that's what EBITDA is
it's profit, excluding thosethings.
(03:34):
Number one you ignore interestbecause we don't want to account
for the capital structure of abusiness.
So one business may have a lotof debt, whereas another
business may have a lot ofequity.
So when we want to compareprofit, apples to apples from
one company to the next, ebitdais a great way to do it because
it excludes interest, right.
The same thing is true withtaxes.
(03:54):
There are a lot of nuances whenit comes to taxes with
businesses.
Some may have tax credits orlost carry forwards, et cetera.
So we're just going to excludetaxes so we could look at
businesses on an apples toapples basis, all right for now,
and then with depreciation andamortization.
The reason why we excluded atthe EBITDA level is because we
can compare companies withoutregards to how they invest in
(04:18):
property, plant and equipmentand the methods they use to
depreciate or amortize thatproperty, plant and equipment.
All right, so we end up withEBITDA, and this is where most
companies stop and in fact thisis where a lot of forecasts stop
.
They stop at EBITDA, thisprofit line right, or some
variation of EBITDA, andbusiness owners are like, okay,
(04:38):
we're good, we know what ourEBITDA is and therefore we can
run the business effectively.
Wrong, because at EBITDA westill have to keep going.
Ultimately, we subtract outdepreciation and amortization
for tax purposes.
Then that leaves us with EBIT,e-b-i-t.
We took out the DA in EBITDA.
Right, because for depreciationand amortization, although
(04:59):
they're a non-cash item, theyare tax deductible and we have
to get down to our net operatingprofit after tax.
So we have to subtract it fromEBITDA.
Then we're left with EBIT.
Like I said, we account fortaxes and then we're left with
net operating profit after tax.
Nopat, we're not done yet,though.
We add back depreciation andamortization because, like I
(05:20):
said, they're non-cash items andwe're trying to get to cashflow
, so we add them back to notepad.
Then we account for changes inworking capital and essentially,
changes in working capital isthe difference between your
current assets and your currentliabilities from one period to
the next.
And this is where a lot ofcompanies get tripped up,
especially in their forecast,because it's really hard to
(05:41):
forecast current assets andcurrent liabilities.
More on that here in just aminute.
But also we have to account forcapital expenditures, capex.
So you take NOPAT, add backdepreciation and amortization,
account for changes in workingcapital, subtract out capital
expenditures in other words,investments and property plan
equipment and bingo, we justarrived at free cashflow.
(06:05):
So I know I went through thatpretty fast.
If you want to learn more aboutthis, by the way, I have a free
program at boosting yourfinancial IQ byfiqcom.
In fact, you could take it.
It's called the financial pro.
It's totally free, it's over ahundred video lessons and there
are no gimmicks.
You just go there, you sign up,you can learn from an app, you
can learn from your computer,you can learn from anywhere in
(06:28):
the world, and it's all free,zero dollars.
Okay.
So check that out if you wantto learn more about this
breakdown and you want to see itvisually.
But nonetheless, I just walkedyou through free cashflow.
Let's talk about forecasting.
Okay, because forecasting isreally important, because it'll
help you to understand wherethings are going into the future
.
Right now, I'm looking at anactual forecast that we built
(06:50):
for one of our clients, and it'sreally cool because we don't
just stop at the incomestatement.
This is where a lot offorecasts stop for companies.
They just build an incomestatement forecast.
They have revenue, they havetheir expenses, then they have
profit and they're like cool,we're good.
Well, we don't stop there,because then we account for
changes in working capital andCapEx.
(07:11):
Those are items that you cancalculate based on the balance
sheet, if you build out abalance sheet forecast as well.
Like I said, most companiesdon't do this.
They just have an incomestatement forecast and I like to
combine a balance sheetforecast as well so you can get
down to free cash flow, becausethat's what it comes down to.
All right Now, in an idealworld, it'd be great if
(07:31):
companies also include aforecast for the statement of
cash flows, but oftentimesthat's just too challenging.
Most companies don't evengenerate a statement of cash
flows because it's so nuanced,which is fine.
But if you have a forecastedincome statement and a balance
sheet, then you can get the freecashflow and that's what's most
important.
All right.
(07:52):
So when it comes to forecasting,and especially forecasting
working capital, there arereally three main accounts you
have to pay attention toaccounts receivable the amount
of money customers owe you,right.
So if you're extending creditto your customers in other words
, you go out there and performwork and then you say, hey, pay
me in 30 days.
That balance that accumulatesfrom your customers is called
(08:14):
accounts receivable AR, and thatsits on the balance sheet under
current assets.
The next account is inventory.
So if you're buying inventory,stockpiling inventory and you're
accounting for inventory,that's going to show up under
current assets as well and thenunder current liabilities.
The biggest account is accountspayable.
This is the amount of money youowe your vendors if they extend
you credit.
So if you go buy supplies andput it on account and you pay
(08:37):
them in 30, 60 days or whateverit is, then you're going to be
racking up accounts payable.
So when you're forecasting outworking capital, there's some
other accounts that are combinedin current assets and current
liabilities.
But your three main accounts toforecast and to get right, like
I said, are accounts receivable, inventory and accounts payable
(08:59):
.
The reason why cashflow is sohard to forecast is because of
these three accounts.
Because guess what, as abusiness, what accounts do you
actually control?
You don't really controlrevenue.
That's up to your customers.
You can control cost that's upto your customers.
You can control cost that's upto you.
You get to control the cost foryour business.
But then, when it comes toaccounts receivable, sure you
can set terms on when customerspay you, but customers
(09:20):
ultimately have the final say ofwhen they're going to cut you a
check.
So trying to forecast thatbehavior can be really difficult
.
You may have 30 day terms and acustomer turns around a payment
in 10 days.
Or you have 30 day terms and acustomer pays you in 45 days,
and they're naughty right,they're rebellious, they don't
follow your accounts receivablepolicy.
With inventory you can plan forthat a little bit easier to
(09:40):
forecast, but still it could bechallenging.
And then accounts payable youcan plan that because you could
choose when to release paymentsto your vendors.
But accounts receivable, that'sreally the challenge of
forecasting for cashflow.
But I'll tell you this when youbuild a balance sheet forecast,
I would do accounts receivableand forecast it in days of
(10:01):
revenue.
I would forecast inventory daysof cost of goods sold, because
inventory is more related tocost of goods sold rather than
revenue.
In accounts payable, I wouldalso forecast that as days to
cost of goods sold rather thanrevenue and accounts payable I
would also forecast that as daysof cost of goods sold.
All right, so those are thethree main components of working
capital and then capitalexpenditures.
You can plan for those.
If you're going to go buy atruck or a tractor or invest in
(10:23):
a building, whatever it is, yourproperty, plant, equipment you
could build a schedule for that.
Not as difficult to forecast,for it's just your working
capital that's going to be thebiggest culprit, assuming that
you do a good job up above inrevenue and your costs, et
cetera.
But looking at this forecastright here for this client, I
always tell them look, if I showyou having $120,000 in positive
(10:45):
cashflow, we may be off by, youknow, 20 or $30,000 because of
those swings that I was justtalking about.
But looking forward, it's notabout precision on a
month-to-month basis.
Now, of course we wanna beaccurate, but you're not gonna
know five months out whetheryou're gonna have $120,000 in
positive cashflow or whetherit's gonna be 119 or 118.
(11:08):
It's impossible to forecastwith that type of precision.
However, if I can build out, atleast I know in five months
that we'll roughly have $100,000in positive cash flow, versus
having no visibility whatsoeverin what the future holds.
So close enough is good enoughwhen it comes to cash flow
(11:28):
forecasting, but at least havevisibility into what the numbers
may look like, because I couldtell you, if you look out into
the future and you have negativecash flow of $300,000, you got
a major problem.
Even if it's not $300,000exactly, maybe it's 250, that's
still a problem.
So understanding cashflow andforecasting for it can be very
valuable in building it outmonth by month and making it
(11:51):
rolling is really, reallyimportant.
Now, when it comes to managingcashflow, there are levers you
could pull.
Number one you could do morevolume.
Number two you could do morevolume.
Number two you can influenceyour price.
Number three you can reduceyour cost of goods sold.
Number four you can manage youroverhead, your op-ex.
We talked about working capitaland capital expenditures.
(12:12):
You can manage your risk, andthen you could also put in place
a strategy to drive all of thisAll right.
So, when it comes to managingyour cashflow, those are the
seven levers that we helpcompanies to understand and to
pull on a regular basis toimprove the performance of their
business.
So how do you get more of it Ifyou want more cashflow?
(12:33):
That's where it comes down tostrategy.
So I talk about strategy allthe time how businesses can have
a really good strategy to drivehigher cash flows.
Now, strategy isn't all aboutgenerating more profit or more
cash flow.
Instead, high profit and highcash flow is the result of a
good strategy.
So when you have a strategy,you have to determine where
(12:55):
you're going to compete, howyou're going to compete and,
ultimately, how you're going towin.
And when you can determine allthis and you have a solid
strategy that you implement withyour company and you review it
on a regular basis, that's wherethe magic happens.
So that's what I wanted to talkabout today is cashflow.
And, like I said at thebeginning, if you struggle with
cashflow, you're not alone.
It's not your fault.
(13:15):
A ton of people struggle withcashflow.
You just can't stay stuck there.
That's the key.
You can't stay stuck becausethere are tools, there are
resources to help you out, and Icould tell you businesses that
have struggled once before, thatwere like on the brink of
bankruptcy, have turned aroundwhen they start paying attention
to the right things.
All right, that's what I'llleave you with today.
(13:37):
If you want to talk more aboutthis, you could always reach out
at Coltivar.
com.
I'd love to talk to you moreabout your strategy and about
improving cashflow.
I also just released a book.
It should be out on all theplatforms on Amazon, audible, et
cetera.
If you want to check that out,it's called cashflow, and I go
into more details on all thisstuff right now, as of the date
(13:58):
of this recording, this maychange in the future, so if this
changes, don't get mad at me.
But right now you can getcashflow for free by going to
Coltivar.
com.
All you have to do is pay forthe shipping and handling.
If you live in the continentalUS, I'll cover everything else
the cost of the book, theprinting, et cetera and that's
my gift to you.
If you want to check that out.
Like I said, in the future, ifthis offer goes away, don't get
(14:20):
mad at me.
You have to act now.
All right, have a great weekand until next episode, take
care of yourself.
Cheers.
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