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One Reason You Might Be Struggling To Improve Cash Flow

The secret reason that CEOs feel burnt out and struggle to improve cash flow.

Did you know that only 20% of employees around the world feel engaged in their work? That number is depressingly low. Engagement leads to better results, lower turnover, more investment, and happier personnel.

From a CEOs perspective, engaged employees lead to improved cash flow.

CEOs often have the benefit of viewing their company from a bird’s eye view. They get to establish the systems, strategize in the big picture, and make highly impactful decisions. But when those strategies, plans, and decisions lead to fruitless endeavors and low cash flow, it is very frustrating.

While a benefit, that bird’s eye view can prevent a CEO from seeing the fine cogs working in the business machine, such as personnel engagement.

In today’s blog, we’re going to look at a scenario where this did prevent a CEO from improving cash flow and how we would remedy the situation.

What Happened?

An entrepreneur and her business partner started a venture that ended up being successful. The original entrepreneur essentially took a loan from that business to start a new one. In this new venture, she established excellent systems that she knew well.

Her ultimate goal was to generate enough profit to pay her loan back to herself and her business partner.

What Was The Ultimate Problem?

Unfortunately, while she knew her business’s processes well and she had a good idea, the business did not have the clients to make this happen. Per a professional evaluation, it became apparent her business needed at least 6 new clients or she would go out of business in the next 60 days.

While her apparent problem was a lack of clients and cash flow, we see an underlying cause. During an evaluation of the business, it was clear that this entrepreneur really drove the business. She knew the processes through and through. But the sales manager - who was responsible for bringing in clients - was not involved enough in the business. He lacked engagement.

How Would We Improve Cash Flow?

Looking at a cash flow statement makes the surface problem apparent: the business doesn’t make enough money. In response to this, we could develop a business and marketing plan to increase the company’s profit; however, that is like putting duct tape on the titanic. The damage is much deeper and larger in the business. A flashy business and marketing plan might buy the company a little bit of a time, but does not promote true success.

To truly diagnose the problem, we need a deeper understanding of the business.

The first thing we would do in this situation is try to understand the entrepreneur’s goal for their business. By putting ourselves in her shoes, we enable ourselves to determine the best possible path to meet her goals - not just what we think is right for her business. We do this by asking her to consider her key business objectives, challenges, and market opportunities.

Next, we would dive deep into the business’s current format. We would ask the entrepreneur to consider items such as:

  • her current business systems, such as marketing, sales, delivery, customer service, etc.

  • key components of her business that have made her successful.

  • who is responsible for what.

  • what makes her business unique.

  • how she currently measures metrics.

  • her vision for the next 90 days, in relation to her key objectives, challenges, and market opportunities.

While this process allows an entrepreneur to deeper consider their business, it also allows us to make note - as an outside party - of what we see in the business.

In this situation, we could see that the founder of the business had done an excellent job in forming her systems. She had a deep understanding of her business and her goals. But, in this process, it became apparent that the sales manager did not hold that same understanding. He was disconnected from the heart of the business: its systems.

Because he lacked that foundation and engagement, he was less effective in his role. While this CEO was doing a phenomenal job driving the business, it would not go anywhere because she had the wrong person in the job.

The good news is that there is a remedy for this. One remedy is to replace the person. This can cause turmoil in the team and is preferably not the first option. We would first opt to re-train the person, as long as they are receptive. If they are ready and willing, they can become the right person for the job.

What Is The Ultimate Take Away?

To improve your cash flow, you need to have a team, but to have a truly effective team, you need the right person doing the right job. Every human has their strengths and human capital is incredibly valuable. But if you have someone working in a role that is not suited for them, it will add stress and turmoil to your life as a CEO.

If someone is not prospering in a role and is unwilling to adapt to fit the role, it might be time to consider someone else. There is nothing more powerful than a team consisting of the right people doing the right job.

Not only is this a service to your business and you, as the CEO, but a service to your personnel. If they cannot find engagement in the role they are serving in and your business, they deserve the opportunity to find a role that does inspire their engagement. Your team also deserves to work with other people as engaged as they are.

What Steps Should You Take To Improve Your Cash Flow?

This scenario is one of many that could prevent you from improving your cash flow and growing your business the way you know it can. Like we mentioned earlier that CEO bird’s eye view is a unique and powerful one, but it allows for a lot of blindspots, as well.

If you are truly ready to invest in your business and identify your growth obstacles, the right advice is priceless. Contact us today and we can go from there.


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