A very honest article about cashflow and wellbeing.

For many business owners, our toes curl at the word cashflow. Cashflow is scary, it's everything that keeps business sustainable and food on the table and can often be out of our immediate control. If someone tries to talk to me about profit and loss and what cash I'll have at the end of it I come over all Wicked Witch of the East, my pretties.

According to this stat that I just Googled to give this article legitimacy, cashflow problems kill 82% of new businesses.

It's obvious why; all business is, really, is the systematic moving around of money with some jargon and important sounding emails along the way. Some money comes in, then it gets moved somewhere else, then some more turns up, then that gets moved. I mean, I am not exactly writing the course outline for an MBA here, but I am pretty sure this is exactly all business is. The better you are at the systematic making and moving of money, then the better you are at business.

Though, for new and seasoned business owners alike, management of this systematic movement of money is difficult (and also like, really boring) because we don't always know exactly what is coming in, there's often unexpected expenses that we didn't foresee having to go out, and it's rare the money comes in exactly as it is meant to.

Business money is also fundamentally different to personal money. It is often a lot bigger, more unwieldily, somehow a little less meaningful, and gets signed off and spent at great speed.

I find it all bloody terrifying. Or, at least, I did.

For the first couple of years of being a business owner, I squirrelled away cash in my business, leaving it sitting there in the account doing nothing helpful other than just being there should I need it. It was my psychological financial security net. Logging in to my account and seeing cash in the bank rewarded me a sense of control and calm in the otherwise chaos and exhaustion of setting up a new business. More experienced business-ers may have moved that money somewhere more sensible where it had money babies, but I am only just entering my business adolescence where I learn how fiscal consummation works. (I think am in the angst phase).

Aside from the simple comfort I took from having six figures in the bank account, this may not have been the best strategy, as I neglected my personal finances in the meantime. I have never been, and likely never will be, particularly good with money in the way that many people are. I ultimately don't really care about cash, provided I can pay my rent and have enough money for small batch gin. I am, by nature, more interested in people, not pounds. I started a business to do good work, rather than to make myself rich. This has made learning about business, the systematic movement of money, a steep, but invaluable, learning curve.

One of the key lessons on this steep ass curve of learning how to manage money, it transpires, is like...running out of it.

About six months ago, I had plenty of cash in the bank. Then, some of those aforementioned unforeseen circumstances happened.

I got a big, completely unanticipated, tax bill. It turns out, during the first year of business I literally just forgot all about tax. Honestly, this elusive little thing called tax that I smugly drink wine and lament about corporations not paying enough of, just slipped my mind. I had always regularly paid VAT so...that was it, right? I was going through some old emails and found an aged, unread email from my accountant with some mystery document attached. I called him:

"Hello Peter. I have an email here from over a year ago with a mystery
document attached. 
Was I meant to pay those?"

"Yes, of course. Didn't you?"

"Nope."

"Ah. Sorry"

Sorry indeed. I felt like an idiot. How did that even happen?! Though, I have since spoken to many new business owners who have done the same. If it's happened to you too, don't beat yourself up about it, we are not idiots, we are beginners.

At around the same time, we lost our main, biggest and most regular paying client. Not our fault, just unavoidable business change. We also offered another client some free work, as we hadn't quite met expectation, I wanted to do a good job for them, so stopped charging and started wildly over-servicing, at great cost. We had won several contracts at the end of last year that took months and months to get through procurement and signed off, which made managing resource and sales impossible. One of the bigger projects we won consequently ghosted us like my high school boyfriend. I incurred unexpected legal and travel expenses on account of falling in love with an American (he is yet to ghost me, which is excellent). Many of our clients are irregular payers and that's often just the reality of business. I knew I needed to scale what I was bad at so hired an ops director which, valuable as it is, ate it to our profits in a way I hadn't quite anticipated. Over the years the business had become bloated and bulky with tools and licenses and subscriptions I was losing a handle of. I had taken on a lot of project work where the project had gone on longer than anticipated which prevented me invoicing at the time I anticipated.

In a nutshell, I began to run out of money. And quickly.

I knew, I always knew, that this was only an issue of poor timing. I was, for the first time in my otherwise rosily profitable business life, experiencing those famous cashflow issues. We were still winning clients, we were still growing. We had experienced some set backs and had to ride out the storm for, what I calculated to be about four months, on the cash I had.

For context, at the time it was taking about 30k a month to run my business at it's leanest, so that six figure sum I’d squirrelled away began to look quite meagre in this context.

I got incredibly stressed. But a stress I could do nothing productive with other than ride it out. The cash was coming, we had overdue invoices amounting in droves and new clients signing.

Aside from this, visa complications meant my husband was getting deported (crisis since averted), that I was financially responsible for both of us, and all our outgoings, for way over a year (crisis since averted). Also, in all of this, I had fraudulent activity on my account and they wiped everything I did have. It got resolved eventually but it took a couple of weeks. A couple of beautiful beautiful weeks.

I began to send messages like this.

That day, I had given a talk at a conference in the morning. It went well and I was feeling good. I was just sitting, happily enjoying the rest of the talks and my stomach lurched and I had an overwhelming sense of fear, what felt like involuntarily. It was new and it happened a lot over those few months.

What at the time I labelled as "strange" I can now clearly see that I was suffering from severe anxiety as a direct result of the stress of my cashflow issues. I did have a lot of other things going on in my life at that time, though with the glory of hindsight and good old wine fuelled introspection, I can clearly identify this is the primary source of my anxiety.

Despite always knowing it would be OK, I was so anxious about cashflow, more than anything else in my life, for a few reasons:

(I felt) I couldn't really talk to anyone about it.

I carried a lot of the financial stress for my husband, as he was literally on the cusp of getting deported and completely unable to work and therefore financially contribute so, you know, his plate was fairly full in that regard also.

As a single founder, I could not speak to my team, as that would equally create stress for them, which would be unhelpful and unproductive. My friends mainly just looked sad and terrified, which made me feel guilty for worrying them. My parents would have just wanted to help, but don't have the ability to, so I didn't want to make them feel guilty, either.

I think I was simply reluctant to speak openly about it at first as I didn't want anyone to think I, or my business, was failing, when it was not. I could speak to other business owners, though it took me a long time to really identify that as the source of my stress so left it right until the last minute. When I did eventually speak to some close friends who also ran businesses, it felt like having a really lovely big wee in the morning.

I think that's why I am writing this. I want to talk openly about my, very real, cash flow issues and the, very real, impact they had on my emotional health so perhaps others can do the same. Temporary cashflow issues are not a marker of a failing business. Cashflow is often an inevitable and unavoidable part of running a business that feels FUCKING AWFUL.

It was out of my hands

The problem with cashflow issues, as mentioned above, is that they're more often than not due to late paying customers. And, more often than not, we can only control this to a certain extent whilst we still want to keep the working dynamic happy.

Knowing I was already doing everything that I could practically do, created an empty stress that just sat there with nowhere to go. I think that's ultimately why it began to overwhelm me. I am very good at taking stress and turning it in to action, though when I can't, I struggle to manage it.

It requires a huge amount of self trust

I had to keep telling myself that I had already identified, and solved, this problem months ago. I told myself I just had to ride it out. That I had planned for this. I had my contingency. I had to simply trust myself.

That's a very hard thing to do, for anyone, when payments are mounting and money is getting tighter and tighter.

Things got really bloody hairy for a moment there. I was literally days away from being able to pay my rent, prioritising (rightly, I believe) paying my invoices over myself.

The long story short, is that I was right. In pretty much exactly the time frame I worked out, invoices all got paid, the clients we were waiting for all signed, and now we're happily back exactly where we were and where I always knew and hoped we would be at this time. Though that does not mean I did not suffer, and learn, over the past couple of months. I had historically been incredibly fortunate to have never really experienced any kind of cash flow issues in my business. It was new, and it was terrifying, and I am sure that at some point in my life it will happen again. Though next time I will be armoured with a few more invaluable skills.

Have a dedicated person to do the money thing if it's not your bag

I have an accountant, and a management accountant, but I need more than that. I need someone to strategically manage my finances, and be there to take some of the emotional brunt when it's not going exactly as planned. The business is now of a size and scale where I can't manage that aspect, and nor should I.

Starting a business is an exercise in learning two things; what you can do and what you can't and mitigating for the latter is the most important thing any founder can learn.

Business money is not personal money

I talk about this a lot in my book (SHAMELESS PLUG BUT I DO OK). The mental distinction you have to create between "my money" and "business money" when you start out is a really difficult line to draw. It takes time to stop seeing that money as directly yours. I always just assumed, wrongly, that a healthy business account meant a healthy personal account. Though it only really means that if you are still healthily managing your personal finances, which I was not. I got distracted. Business money gets sucked up in a way that personal money does not. I need to start putting my personal finances first and foremost.

Basically I have like, 0.003% of my brain that is willing to think about money, and I focused all my limited attention span on the business money.

I need to start making sensible and strategic investments, and I am not convinced that an ethically sourced kombucha subscription (literally, I have that) is one of them.

I need to talk to people who have been through a similar process

I work alone, and it can be lonely as shit. Like, Bridget Jones karaoke lonely.

So I need to get better at creating a framework for myself to talk this through stuff with an objective, experienced party. Thank you to those peers who have given their time and support to me so far. If you are reading this and any of it resonates then, please, call me. Genuinely. You can contact me here.

(If anybody uses this to sell me shit then it's your own karma you're fucking with, k).

As business owners we have a duty to our team, those who rely on us, and to our clients, those who trust us, to present ourselves as in control.

Christ almighty that's exhausting.

Can I just have a minute where I hold my hands up and go "Hey so, I was totally skint for a little bit. It's OK! It's not all falling apart, but for a moment there I was, like, so broke!"

God that feels good.

Trust myself

I had it under control. I always had it under control. Like, Britney circa 2009 under control, but under control nonetheless. I need to learn to trust myself and that I am making the right decisions and that this was just a storm that I needed to weather.

I am proud to have weathered the storm. And proud to have not found myself shipwrecked on a desert island with facial hair in the process.

DRINKS ON ME!

(Not really, that's what got me in this mess in the first place)

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