Powerful Business Strategies - Solving Cash Flow Problems

0:04 Hi, you have done to censure Wow for you. Your This is the Pipe Man here on the Adventures pipe Man W four c Y Radio with our resident business expert with some powerful business strategies. Here on the Positively Pipemin segment. Let's welcome Michael Barberita. How are you excellent? Thanks for having me. How you do it? I'm doing great. And like last week we were talking about ice cream and lines of credit, that's right, and this week we're talking about solving cash flow problems. Hopeful, Hopefully that doesn't mean your ice cream's melting, but I do think they kind of go hand in hand. So what advice do you have for our listeners?

1:00 Yeah, so, you know, cash has hiding places, and it probably takes me about five to ten minutes to look at a balance sheet and really understand where the cash is going. Sometimes it's going it's hiding in an inventory. Sometimes it's hiding in receivables. Sometimes it's hiding in something called prepaid expenses, which is something your bookkeeper will put like if you had to pay a deposit for a trade show that's happening in the future, that would go into prepaid expenses, or if you had to make a big deposit on an insurance policy that would go into prepaid expenses, because that's an expense that would happen every month, and it be incurred every month, but not all at once, which was you know, for example, if the deposit is five months of insurance, that shouldn't all go to insurance expense in one month. Should get spread out over five months, and it usually he hangs out in prepaid expenses and gets taken out of prepaid expenses and into insurance expense as time passes. And with respect to the trade show, whenever the trade show occurs, that's when the expense occurs.

2:13 So that's another place. Another place that could be hiding is capital expenditures if you're buying equipment and or if you have equipment loans. You know, what people don't understand is that when you have an equipment loan, you make a payment of interest and principle. The only thing that goes to the P and L is the interest. The principal piece reduces liability on the balance sheet and doesn't show up on the P and L. So when people make twenty thousand dollars, then they say, well, where is it? If they had principal payments on equipment loans or any kind of loan for that matter, of twenty thousand dollars or thirty thousand dollars, they now have a negative cash flow.

2:59 They make twenty when they thirty thousand went to pay down the principle on loans. So people don't understand that. People think if they make twenty thousand, they could take out twenty thousand. That creates cash flow problems. If you have other things like loans where you're paying the principle on those loans, you are actually expending cash when you make those payments that doesn't show up on the P and L. That's really a tricky area for a lot of people if I see that time and time again. So we have a program called ninety Days to Fast Cash, and what we do. The first thing we do in that program is we find the hiding places where cash is hiding. Now, certainly we'll look at receivables and we'll explain we have a number of strategies that we use when it comes to how to manage receivables. And to give you an example, I was just working with a client in the month of October and that client I was able to show that client how to pick up two hundred thousand dollars of additional cash flow in two weeks just by managing the receivables properly, you know. And one thing that's really interesting. I see this a lot in the trades. When a trades person goes to a

4:31 house and finishes the job, it's customary to get paid when the job is finished, not to put it on your receivables, right. People in the trades have to understand and learn how to manage their receivables where when they finish the job, they tell the business of the customer, the residential customer up front, We're going to collect a check or get a credit card when the job is done. Period. But I can't tell you how many people in the trades just blow off that that piece of it and then they have a receivable and then it never gets paid. Yeah, right, And so that's that's cash flow that you're missing out on.

5:13 That's because their money is hitting in a mattress. It's amazing. It's absolutely amazing to me. But one of the things, so one of the things we do in our ninety Days to Fast Cash program is cash has hiding places, and so we find the hiding places and sometimes that could reveal, you know, in the case of my client in October, a couple hundred thousand dollars a cash flow in a couple of weeks. Yeah, but we also talk about and how to strategically raise prices something that business owners and I say the words strategically because there's strategic ways to do that with packaging and bundling, with upsells, down seals and cross seals. There's strategic ways to increase prices where it's not even noticeable. You know.

5:59 Some some companies have had opportunity to raise their price is two or three percent and their customers won't even notice it. But that's two to three percent more gross profit points, which can be very significant on big volumes. So strategically raising prices, strategically cutting costs. And what we do when we cut costs is we ask the business owner four key questions. Is that expense going to help acquire a customer, Is the expense going to help retain the customer, Is the expense going to increase the long term value of the customer, And is the expense help deliver the product or service to a customer? If it doesn't qualify in any one of those. If the answer is no to all of those, you cut the expense.

6:47 So we have strategic That was just one example, but we have strategic ways of cutting expenses. We also encourage clients with cash flow problems to increase or or get deposits from a customer when they when they sell it a customer, it's customary to get a retainer. If you're in the professional services business, or if you're in the trades, obviously get a deposit. Now, I helped one of my clients in the trades. He was given a ten percent he was asking for a ten percent deposit, where it was customary in that trade to ask for a third deposit, and increased his cash flow twenty five percent in two months because he's asking for the pick a deposit.

7:39 And people are used to it like it. I think people actually will be a little concerned if it's smaller than the average. To be honest like that, maybe it's not legitimate. You know, even though you think you're doing the right thing by taking less of a deposit, you might be, you know, stabbing yourself in the foot to be honest. And you know what kills me. They never mentioned it as a feature of their product when they were talking to the customer. HM. Okay, so they had a lower deposit, but they never used it as a selling technique. Yeah, that would be a selling point. So I have a perfect example of this. So my dad, that's how I got into a polling SPA business. From a very young age. He was in the spa business, and when he was older and his health was ailing, I was helping him with his SPA business while I was actually literally starting the radio network. But I was helping him, so I was working like fifty million hours a day.

8:47 But I came from the investment business, and he had this sales pitch to get people to buy that worked quite effectively for him. Where you know these eight thousand dollars spas. All he had to do was put a two hundred dollars deposit down, and in his mind, he wanted only two hundred because he didn't want to spend that money that was coming in and then it'd be a problem come time when it was to deliver the spot. Now me, I came in with a very different attitude, coming from the investment business. I got people to pay up front one hundred percent deposit hundred and every time, and they didn't even flinch, because it's all about how you say it and how you present it, you know.

9:31 And he used to get actually upset at me for doing that. Don't do that, you know, I don't I have to give. I'd rather give back two hundred if I have to than eight thousand. But here's what But here's what happened. The people that only put two hundred dollars deposits down, they're quick to cancel even if they think they won't get the two hundred back, because it's just a two hundred dollars loss, Whereas none of the deals I would sell would cancel because they were fully vested in it. So not only from the viewpoint of how much money that they already put out, but the fact that they all the mindset of already putting it out, okay, and also the mindset of you know, I'm already fully vested in this, and they take ownership of whatever they're buying, Like the people that were putting two hundred dollars deposits were not taking ownerships to the spotsor like, okay, I'll just give the two hundred dollars to you know, shut the salesperson up, you know, whereas with me, they were giving the full amount and they had already completely made their decision. That wasn't going to change. And in their mind, their mindset is they already owned the spines or a in their backyard.

10:48 Unbelievable. And you know, to your father's credit though at least he used that as a selling. Technique, yes he did. My clients when they were doing that, they weren't even using it as a sales technique. That's benefit whatsoever. Here they are giving an advantage and they're not even using it in their sales pitch. Oh I would use it all the time if it were made right. They never did, so, you know, it's just it's just one of those things that people not they're not thinking about. They need they need someone to help them think about these things. And that's that's where we come in. And and there are so many little tidbits like that, little tweaks.

11:37 These are just small. This isn't like we're going to blow up the business. It's just small, little tweaksh. On most of these things. And as we continue with our ninety dight fast Cash program, we get into upsell, down sell, and cross out, because that's that could have an immediate impact as well as compelling offers. We get deep into that. I'm we add clients, increased business and increase cash flow at the same time by by generating more compelling offers, risk reversals and adding more value to the product and bundling and packaging being indifferent to the outcome.

12:19 Having a time limit on when they offer is good for having scarcity where you know, they only have three appointments left, or they only have three units left. All those things have added to their cash flow because they're able to turn the sale quicker by having the compelling offers. Yeah, and so our ninety day to fast Cash program and you know, we guarantee increasing our client's cash flow by at least fifty ninety days or or we give all the money back. We know, and that's you know when we talk about how that's calculated and so fourth upfront, but we we guarantee our performance. That's our risk reversal to your audience. Nice and so yeah, and so the way that the way to participate in the ninety days to Fast Cash program is to go to our website www.

13:17 Dot NeXTSTEP CFO dot net. Go to the contact form in the website, fill out the contact form and in the message section put ninety days to fast cash or just fast cash. All right, well, I want some fast cash and we're going to fastly cash out of this place because I think we gave them some great information today and I absolutely love that we can give all these powerful business strategies from you, Michael Barbarita from Next Step CFO. Everybody has to check you out, and everybody asks tune in every single Monday to the Positively Pipemin Day and a week for the Adventures Pipeman, where you can get more powerful business strategies from Michael Barbarica. Thanks for being here and thanks for being on the Adventures pipe.

14:05 Man, Thanks for having me. Thank you for listening to the Adventures of Pipemin on w for CUI Radio.