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January Jitters - feeling the impact of cash flow

January Jitters - feeling the impact of cash flow

By: Catherine Young

My brother-in-law taught me this mantra early on in my entrepreneurial journey - 

Turnover is vanity

Profit is sanity

Cash flow is reality

I did not quite understand the saying until feeling it in my own business, as well as engaging with other small business owners, albeit in a mentoring or coaching capacity, or just sharing war stories over a cup of coffee, that cash flow truly is what makes or breaks a business. 

We are at the start of the new year, and the start of anything new is usually exciting, full of promise, and fresh with possibility. But what was most interesting to me about these first two weeks of January 2016 was the lack of excitement about the promise of the new year, as the heavy load of cash flow concerns dominated the world of possibility with a sense of despair and fear among SME peers and partners alike.

I was fascinated to see the lack of clarity, the lack of energy, the lack of creativity and the lack of joy as a result of the lurking January month end jitters. And this got me thinking. A month when starting-anew should be bringing with it loads of creativity and possibility is being wasted on a month of worry and perceived misfortune. Instead of using the adversity to our advantage, we are tempted to retreat back into our corner of concern, and, literally, put our month on hold until month end comes, and goes, bills paid or not. And with that losing the opportunity of fresh minds and fresh client budgets after an end of year break.

Don't misunderstand me. Salaries and bills have to be paid, of course, but we have a choice on how we tackle the issue of cash flow constraints. We can choose to engage with it, bite by bite, so to speak, or we can choose for it to consume us. It was with this thought in mind this morning that I had an early morning coffee conversation with a dear friend, also an entrepreneur, about the impact of cash flow on our businesses, our lives, and our sense of humour! Reflecting on the conversation, these key points stood out for me.

It is okay to acknowledge the issue of cash flow. It is also okay to be concerned about it. But it is not okay for it to consume us so as entrepreneurs that we lose focus on our businesses, our employees and most importantly our clients. Some cool thoughts I would like to share, that may be of value to you if you are experiencing January Jitters:

1. Keep a great sense of humour, and believe the storm to be a teacher of better navigation, which it is!

2. Be open and honest with those you owe money to, and give them early heads-up should you not be able to meet your commitments on time.

3. Take every call, as uncomfortable as it may be, and continue to tell the truth. And if you can't take the call for valid reasons, send a message to advise you will call as soon as practically possible. And then do so.

4. Break the problem down into manageable chunks, if you continue to be blinded by the big monster, you will not be able to find ways to overcome the fear.

5. Breathe. Often. Pause. Often. Make a concerted effort to take at least two to three fifteen minute breaks throughout your day to be still. The power of breathing remains a gift.

6. Be firm with your debtors. Call every day. Collect the money you earned.

7. Whatever plans you make, pay your employees first. Without them you will not have a business.

8. To avoid January Jitters in the following year, ensure you plan for it. It is a fact of business that payments are often delayed over December month ends. Make it part of your planning now already for the end of 2016.

9. And lastly, don't lose hope. It is in the eye of the storm that the required clarity comes on how to navigate the business out of the storm, and reap the rewards of the rain that fell. Use the quiet of the eye.

Hoping you have a wonderful end to your January Jitters. 

Become the best skipper of your boat, so you can teach other entrepreneurs starting out how to navigate these wet January conditions.

The South African SME Landscape: 2015