Managing cash flow effectively is the lifeline of any business, especially for small business owners who often operate with tighter margins and less financial flexibility. Drawing from insights shared in a Vistage CEO Peer Group meeting discussion, here are fifteen best practices to help you master the art of cash flow management and ensure your business thrives.
Over the years, I have delved into numerous books on small business success, accumulating a wealth of knowledge on various aspects of the entrepreneurial journey.
Growth is hard work. For the past 27 years, I’ve worked as an executive coach, Vistage Chair, trainer or management consultant with hundreds of organizations.
I am asked all the time if there is a simple CEO success formula that every leader should follow. I believe there is and unfortunately
Leadership isn’t rocket science. Creating the conditions for business success is actually pretty basic: be clear about where you are going and why; define what success looks like and track performance; make sure all of your key people on the same page; don’t “wing it” when it comes to important decisions; ensure that every single employee knows how they fit in the big picture and what they are supposed to be doing; create a process for providing on-going performance feedback; hold people accountable for results (including yourself); be careful about who you hire and put in supervisory roles; provide extensive training and support; never stop communicating with your customers; and make sure everyone shares in the success of the business but also feels the pinch of nonperformance.
The biggest mistake leaders make is to think it is all about them. They believe that success or failure is a direct result of their own personal behavior rather than a team effort. Show me a successful leader and I will show you a person surrounded by good people who each do their own jobs exceedingly well. While it is common practice in this country to celebrate the individual, no one builds a high performing organization by themselves. This doesn’t mean that the leader isn’t an essential ingredient; however, he/she needs other ingredients to complete the recipe.
I find that one of the most recognizable traits of an effective leader is that they bring positive energy to a room. You can feel it the moment they walk through the door. I have been in banquet halls far from the entrance and felt the presence of certain people as they arrived. It’s almost as if a small electrical jolt works its way through the crowd. While most of us aren’t blessed with this type of “rock star” aura, we can certainly notice and work on the effect we have on others. You are either adding energy to the group dynamic or diminishing it. It really is this simple. Leaders must be a source of consistent positive energy if they want to get the most of out of their people.
Business is hard enough with encumbering it with seasonality issues. I’ve seen many talented and hard working small business owners struggle under the weight of non-seasonal business volume. It’s hard to staff properly, keep good people and manage your cash properly. If you’re not careful it can begin to feel like a “feast or famine” situation which over the years can start to wear you down. Of course there are many people who manage to navigate the “ups and downs” properly, but they are usually pretty disciplined about their business leadership actions. If you are in a seasonal business environment, I encourage you to consider the following:
I see far too many leaders who view their role as a burden. While there will certainly be moments of hard work, leadership should not be excessively hard and there should be many more moments where it feels easy and you truly enjoy what you are doing. If you are getting minimal joy from your work and increasingly believe the rewards aren’t worth the effort, then you are doing something wrong. Of course, sometimes a situations isn’t salvageable but that is rare. More often than not, you are making it harder than it should be. The opportunity to lead others is a privilege and should be embraced accordingly.
Fear can be a destabilizing emotion in organizations. It limits risk taking, inhibits action and worst of all creates a cover your a** (CYA) mentality which results in countless hours of wasted energy. One the biggest fears we all grapple with is the fear of being wrong and/or making mistakes. Far too many employees would rather do nothing or rigorously defend the status quo instead of going out a limb and trying something new or different. As a result of these fears, most organizations are stuck in a survival mode because success almost always involves having courage and taking risks.