In this episode, Peter Mohr chats with business coach Alvin Narsey about the all-important cash flow... vital for every entrepreneur's success yet often, the bane of their existence. Many business owners assume they must get more customers or raise their prices to protect their profits. Easier said than done... but the good news is that it's simpler to boost your cash flow than you might think!
Key Topics
Small business finances
Cash flow
Business profitability
Customer lifetime value
Sustainable business growth
Notable Passages
3:47 Why we put off looking at our business's numbers
5:51 The minimal-cost way to actually increase your cash flow
8:00 Marketing vs selling: how to recapture past customers
10:38 Quick-and-dirty tips for boosting your profitability
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visibility gives you a way of understanding what is happening in your business, certainly from a cash flow level. And also, when you start to make decisions in your business with respect to marketing, or introducing new initiatives. Most of us as business owners, we don't sort of track and measure anything like that. And without really having visibility, you don't even know if the strategy that you're employing is working. And this is aside from the fact that if you're like me, and no business owner has been like me, but I try a strategy for a week or two. And then I learned something else. And I run and tried something else.
Unknown:
So I did that. No, no. Yeah, exactly. Squirrel squirrel.
Alvin Narsey:
So that's why I think visibility is so important. And for me, what comes under the visibility component of your business is understanding your cash flow, understanding your margins, and really setting up some truly meaningful KPIs or key performance indicators for your business. And this is what I put under the umbrella of visibility.
Pete Mohr:
Are you making every decision in your business may be feeling a little overworked and overwhelmed? Do you ever wish you had someone to go over the big decisions and entrepreneurial choices you had to make? Well, maybe this sounds familiar. Your partner at home doesn't want to hear about business anymore. And your friends don't know what the heck you're talking about. And maybe your team at work well, even though you have an open door policy, they're not always as open as you'd like them to be? Well, there's good news. I have room for two more one on one coaching clients next quarter. And, you know, here's how it works. We'll get together on Zoom either every week, or every second week to discuss the strategies and frameworks that will clarify your thinking and advance your business and entrepreneurial life. It's all about the five P's, your promise your product, your process, your people and your profit. Once they're better aligned, you'll enjoy a better life and business. Remember, you own your business and it shouldn't own you. It's time to reduce the frustrations and increase the freedoms. So if this sounds interesting, go to simplifying entrepreneurship.com forward slash Call to book a freedom call with me and we'll see if we're right fit. Welcome to another edition of the simplifying entrepreneurship podcast helping you cut through the chaos of running a business. After all, you own your business, and it shouldn't own you and Alan narcy is joining me today to talk all around the importance of cash flow and profit. Well, you know, cash flow we talked about a little bit in the episode. But cash flow is one of those things. It's not as cool as marketing. It's not as fun to talk about all the time. And it's one of the things that often gets left behind. It's also one of the things that syncs most businesses. So how important is it it's vitally important to your success as an entrepreneur. So you're gonna want to listen to this episode without narcy as we dig into cashflow here on the simplifying entrepreneurship podcast. Alvin Darcy, it is a pleasure to have you here on the simplifying entrepreneurship podcast today.
Alvin Narsey:
Thank you so much for having me pay pleasure to be here. Yeah.
Pete Mohr:
I'm excited to talk today about something that's vital to our businesses, but often put on a back burner for whatever reason, right, Alvin? You know, we're going to talk today about cash flow. How important is cash flow? Alvin?
Alvin Narsey:
What a loaded question just a little bit. It's often put on the backburner. And for whatever reason, working on your cash flow, or thinking about it somehow has got a little bit of a bad rap. Yeah, I don't know where this happened along the way. And I think there's a lot of confusion that it's really difficult, and, you know, often overlooked once you really slowly begin to understand it and unfolded, it becomes very enlightening.
Pete Mohr:
It's so interesting. And I find cashflow is just such a crucial piece. In fact, it's the one thing that causes most businesses to fail.
Alvin Narsey:
And that's exactly the same thing that happened to me when I first got into business. And I was in the pharmacy business in the pharmacy gang rapidly growing these businesses. And I was figuring out, I was finding out sorry that I kept running out of money, but how is this possible? My turnover, my revenues growing? And my accountant says I'm doing really well. But where's the cash?
Pete Mohr:
zactly? You know, and that digs into sort of our first question around this idea of, why is it important to improve the visibility, the numbers and my retail business? Like you said, your accountant saying, You're doing okay, and you're saying, Well, where is it? So, how important is it to actually see what you need to look at so that you can make some decisions around cash flow.
Alvin Narsey:
For me when I work with clients and just when I was in business, you know, without visibility of the numbers in your business, it's like driving your car at night without the lights on wearing sunglasses, you can't see what you're doing. And you're certainly almost setting yourself up for disaster. So, you know, visibility is really important. What I say. And this, the same thing happened to me. Visibility gives you a way of understanding what is happening in your business, certainly from a cash flow level. And also, when you start to make decisions in your business with respect to marketing, or introducing new initiatives, most of us as business owners, we don't sort of track and measure anything like that. And without really having visibility, you don't even know if the strategy that you're employing is working. And this is aside from the fact that if you're like me, and no business owner has been like me, but I try a strategy for a week or two. And then I learned something else, and I run and try something else. So I did that. No, no. Yeah, exactly. Squirrel squirrel. Yes. So that's why I think visibility is so important. And for me, what comes under the visibility component of your business is understanding your cash flow, understanding your margins, and really setting up some truly meaningful KPIs or key performance indicators for your business. And this is what I put under the umbrella of visibility,
Pete Mohr:
you know, Alvin hits one of those things. And we can say this, we can say, hey, you just need to do this. This idea, it's like, well, I don't know how to do that. And maybe, maybe I'm afraid to ask because I shouldn't know how I'm the business owner, you know, blah, blah, blah, whatever, you know. And if I ask somebody else, I'm going to look as though you know, all this kind of stuff. And what's holding people back from digging into the numbers. It's some
Alvin Narsey:
element of analysis, paralysis, and definitely a high element of overcomplicating it. So I think what happens is, you know, if you're using a bookkeeper, then you might get some reporting, you know, maybe on a quarterly basis, or every month, depending where you are. And if you're getting you some numbers from your accountant, you're probably getting it every six months. And I don't know, you know, for me, when I was using my bookkeepers and accountants that sent me all this bits of papers and numbers, and like, what do I do with all this stuff now, like, it's just so confusing, when we just look at it, and the way I like to look at it with my clients, and the way I ended up doing in my business was just looking at it weekly, and just breaking it down, the cash coming in, how much cash came into your business, how much went out. And if you just start with that, your eyes just open up, you've got X ray vision into your business, and the flow of cash starts to tell you a whole different story, right?
Pete Mohr:
It does, it does. And for somebody who's looking at this, and they're saying, Okay, well, you know, I had x amount of revenue and X amount of expenses, and I'm writing this many checks are these days doing ie transfers, whatever the case is, I think I've signed about six checks this year, as we you know, for in the last six months, it's an amazing thing. But you know, we used to be a little more on top of that, as we signed checks, you know, I think having having sort of everything packaged with a cheque, and it's like, here's all the thing, and with all of the different ways of creating and paying, and it's taken away some of those second balance checks that we used to have in our systems. And when we look at this kind of thing, how are the other ways that we can increase the amount of cash and our businesses other than just kind of saying, Here's what's coming in, here's what's going out this episode of the simplifying entrepreneurship podcast is brought to you by shoe topia.ca. We're always helping our clients look great and feel fantastic with the heat you can free your feet with some of the awesome sandals from names you know and love, like Birkenstock keen and Mephisto Of course, we have you covered for the casual athletic needs to guests like you are at the very heart of Zootopia stop in for a visit or drop in on shoe topia.ca We're currently only shipping to Canadian addresses.
Alvin Narsey:
So you know, one of the main things we should do if we're trying to increase the amount of cash in your business, and this is valid for every business, is to look at your average dollar sale, or you know, however that metric is in your industry. So when you look at your average dollar sale or average sale per client, one of the quickest ways to increase the amount of cash is to actually to increase your that metric there. And that doesn't need to cost money. It's just basically understanding where you are now what are you selling to your clients and customers and just employing some really simple strategies to lift that and you know, even a one or 2% increase in your average basket size, average sale per customer can just flush your bank account with cash because you're not really doing anything extra to raise that basket size. And the second part I think, and I was very guilty of this was not really getting into a habit or a system of reviewing our expenses on a regular basis. Yeah, I would get the phone bill you know, for for my pharmacies that oh my god, the phone bills gone up or the energy's gone up, I should probably ring and negotiate a better deal. But you know, if we get into a habit of maybe doing this in a systematic fashion, maybe every month, just go through one line, and just really make that phone call to one supplier, or one provider every month, you know, half a percent. And you just keep doing that every month. And you'll be so surprised how that affects your bottom line and just flushes your bank account with cash,
Pete Mohr:
those small progressions, right can really it's the, it's the idea of compound interest. It's the same sort of thing. We're compounding each of those one individual lines that you were talking about on your income and expense sheet. And we're really compounding that so that your expenses are dwindling. And at the same time with that first comment around your basket size, increasing your average basket size, it's so much easier to sell more to your existing client than it is to go out and like you said, with the marketing side of things and trying to find some new client, right?
Alvin Narsey:
Yes, yes. And I think marketing is great. It's definitely something we should do. For sure, I feel once we get the fundamentals put down and you know, laid them out nicely, then you know, that really, our marketing return becomes so much more valuable. But I just think with the with the whole cash side of things is like, unfortunately, as business owners, we're really caught up in the running of our business where I was putting, hopefully not, but we are spending time putting out fires and running around everywhere, without really taking a step back. And you know, trying to work on the business, as Michael Gerber said, so that there's the two quick ways that I think we should all business owners can do just to flush their bank account with cash.
Pete Mohr:
So what about people who are already looking at numbers a little bit Alvin and kind of they're in that zone a little bit? How do they know if they're looking at the right numbers versus the wrong numbers?
Alvin Narsey:
Yeah, that's a really good question. I think the fact that you're looking at numbers makes it very right. And I think looking at your cash flow statement, and looking at those particular numbers of income coming in, and of course, your expenses going out. That's the main numbers that it would be looking at. And then of course, overall, your net profit or your gross profit, depending on what industry you in. You know, it doesn't have to be complicated metrics, but just the metrics that affects you on a daily, weekly basis in your business.
Pete Mohr:
Yeah, I couldn't agree more. I mean, I've got this program, and I coach around this model, and I'm writing a book around this model. It's called the five P's. And the last P in that is all around profit. And I know that's a big thing that you coach, too, as well. And why don't you tell us a little bit around the idea of why business owners need a profit generating system?
Alvin Narsey:
Yes. So that goes back to the brief comment we made earlier is like revenue is great. But really, what's really important to you as a business owner, is the amount of profit that you make. So the profit is actually what pays your bills. It'll pay your suppliers, your team, and more importantly, it's your profit that's going to pay yourself, right. So it's really important that as business owners, we focus on the profit side of things, because it's really easy to get caught up in the revenue side of things. And there are some easy ways that you can start to improve the profitability of your business. I mean, the quickest thing to do is to raise your margins, which most business owners are really scared to do, for sure. But if you go about it in a systematic manner, with always making sure that you've got value for the client or customer in mind, it actually becomes really easy to raise your margins, you know, and make more money.
Pete Mohr:
It's interesting to when you're dealing with brands and brands set pricing so that there are sometimes limitations where it's like, you have to stay within the Manufacturer's Suggested Retail Price, you can't raise the price. So then we're looking from a cash flow perspective of, well, how can I cut costs? So these are all the decisions that we make every day to affect our cash flow to affect our process and to affect our profit so that we can live a better life with our businesses? Right, Elvin? Absolutely. I
Alvin Narsey:
mean, and that, you know, and also, as business owners, I think we kind of forget what are we in this business for? Is it meant to provide a job or is it meant to provide us with a lifestyle and pursue our dreams and that kind of thing? So you know, we're, it's always good to remind business owners just like you know, if you wanted a job, go get it, you know, you could get a job, but really, your business can provide you with so much more if you just take the step back to kind of figure out what you as a person want in life, you know, love it.
Pete Mohr:
I love it. Thanks so much for spending some time today talking a little bit of retail talking a little bit of cash flow and a little bit of profit here. Alvin, it's been a good conversation and I want to let everybody have the opportunity to know how to get in touch with you if they want to learn more about your retail coaching and all of the things we've talked about today.
Alvin Narsey:
Absolutely. Thank you. So the best place to get in touch with me is on Facebook. Just look me up Alvin Nasi, my name is in the in the video down here. Send me a message and we can Begin the conversation from there.
Pete Mohr:
Awesome. And we'll certainly include the link in the show notes as well. Alvin, thanks so much for being a part of the simplifying entrepreneurship with me here today. Thanks for having me appreciate. Thanks for spending some time with Alan and I here today and think about how you can apply some of the things we talked about in the podcast? Are you understanding your metrics? What do you need to get from your accountant or your bookkeeper to help you make better decisions? How can you increase the amount of cash start looking every week at your income and your expenses? Dig into that, so you have a better understanding, don't just let it happen. It's so vital that you're in tune with these sorts of things so that you can make the decisions you need to make in order to carry this thing forward. And don't let it happen where it's too late that you can't make directional decisions based on what you need to do and based on some of these numbers that we talked about today. So what are the one two or three key metrics that you are going to start looking at here today, I want you to think about those one, two or three things that you are going to start looking at soon as you get off this episode here today, because I say it all the time. Remember that clarity creates confidence and confidence ignites momentum. These numbers these metrics these statistics will give you clarity to make the decisions, build the confidence and advance your business and your entrepreneurial life. If you'd like to learn more about my coaching programs, simply book a chat with me at speak to pete.com and until next time, make it a great day.
Unknown:
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