Nobody Told Me My Business Would Have Months Like This

I used to think negative cash flow meant something was wrong. If more money went out than came in during a month, my brain immediately went, “We need to make more money.” Coming from poverty and living paycheck to paycheck, watching a bank balance go down didn’t exactly make me feel warm and fuzzy.

But after 18 years and eight businesses, I’ve learned that negative cash flow is 100% part  of owning a business. Every single business will experience it. You are not alone in this season, I promise you. Here’s some examples that we all experience because revenue and expenses rarely arrive in the perfectly coordinated little dance we wish they would:

•           You hire an employee before their work generates additional revenue.
•           You invest in something before you see the return.
•           You have a slow month.
•           You have three payrolls instead of two.

A month or few of negative cash flow doesn't mean your business is failing. Sometimes, that is just the way the ebb and flow of business is. My concern is that we’ve been led to believe that negative cash flow isn’t a normal part of doing business. So we don’t plan for it. Then, when it happens, we’re blindsided and sometimes forced to take out loans just to get through a slow season.

That is one of the reasons I care so much about bookkeeping and cash reserves. I want to see the patterns before they become problems. When my books show me a slower season is coming, I can prepare instead of panic. My SAVINGS account gives me room to make decisions based on what the business needs, not what today’s bank balance says I can afford.

Those reserves have allowed me to do some pretty incredible things. I’ve hired employees before I desperately needed them, protected payroll during slower seasons, and taken care of my team when they needed or wanted raises. Profit and planning have also helped me pay off our house and send my children to college. None of that happened because my cash flow was positive every single month. It happened because I learned to look further ahead than the next deposit.

Negative cash flow doesn’t scare me the way it used to. These days, I know it is going to happen. I review my budget on Tuesdays to be able to understand why it’s happening, when it will happen, how long it should last, and if we are prepared for it.

That little Tuesday habit has replaced a whole lot of panic.

Xo, Crys

Next steps if you are ready:

• Hire My CFO for done-for-you bookkeeping and accounting services
• Use my STOP Method book and workbook to structure your cash flow with intention