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Effective Cash Flow Management with Robyn Johnson
Robyn talks about her experience and effective cash flow management. She also discusses the debt and cash flow forecasting.
Effective cash flow management
Robyn’s team has been coaching high-volume sellers for about 5 years now.
Most people have an issue with cash flow.
Borrowing more money does NOT usually fix the issue.
Hiring your mum to help with packing will not help your overhead
Not understanding your margins and your breakeven.
“5-hour challenge”
Identity breakeven point
Identify the inventory that is not moving.
What % is there under 90 days
Surpassed inventory
If you don’t manage the cash, the cash will manage you.
To create an effective cash flow management, you need to separate out operating expenses from inventory cash.
It’s not just smaller sellers who struggle with the numbers. Had $5M seller who did a VIP day - hadn’t filed taxes in 3 years and had no P & L at all!
How do you calculate the working capital required?
What is working capital
Robyn does not have an MBA background or a CPA.
Most of us are accidental entrepreneurs.
In the Amazon world, we use things in a different way to strict financials!
Keep inventory flowing, cover expenses to achieve effective cash flow management.
The higher your expenses and the lower your margins, the more you need to manage your cashflow.
Rolling cashflow
Think about 13-week rolling cashflow - in 13 weeks, I’m going to be negative in cashflow
So I have 12 weeks to figure out how to cover that
- lower expenses
Bring in more income
Lower outgoings
On Friday you have $42 in an account and on Monday you have $42,000!
Small plates
Mike M recommends you break things into a smaller plate - you’re more acutely aware it’s a finite resource. Like the envelope system for business.
So non-analytical people will be happier with it.
When you need money, it gets very expensive!
Debt
Debt can be a wonderful tool. It can be used to build or to destroy.
It can be an amazing tool to build a business.
Robyn’s business owners with no debt have fewer sleepless nights and less stress, but
They slow the growth of the business.
How do people end up in excessive debt?
There is a myth that more inventory is better. That is not quite right.
Robyn’s seen people go from $1-5M in a year in revenue and making LESS money!
What usually happens is that things are moving, because growth sucks cash, you know you’re making money but you don’t have any cash left in the bank!
So Amazon or a bank offers you large money eg $300,000!
It’s great for the 1st 3 months, you feel things are finally on the move.
Between 2-4 months later, if you haven’t managed that cash well.
If the inventory doesn’t turn over quickly enough, you’ll struggle to meet the payments
Then you’re out of cash now.
And then you take a bridge loan - I just need a loan in 3-6 months.
After 3 months, you take another loan and aren’t paying down credit cards.
But you have to keep buying stock.
Hidden, private pain
In PL world esp, everyone shares their wins, not their losers.
Eg Joe made 6 winners - and $100K
But we don’t know how many losers Joe had and how much profit.
This means that people feel “It’s just me.”
Robyn’s experience
Most businesses go through a period where cash is tight!
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By Michael Veazey
4.5
2626 ratings
Robyn talks about her experience and effective cash flow management. She also discusses the debt and cash flow forecasting.
Effective cash flow management
Robyn’s team has been coaching high-volume sellers for about 5 years now.
Most people have an issue with cash flow.
Borrowing more money does NOT usually fix the issue.
Hiring your mum to help with packing will not help your overhead
Not understanding your margins and your breakeven.
“5-hour challenge”
Identity breakeven point
Identify the inventory that is not moving.
What % is there under 90 days
Surpassed inventory
If you don’t manage the cash, the cash will manage you.
To create an effective cash flow management, you need to separate out operating expenses from inventory cash.
It’s not just smaller sellers who struggle with the numbers. Had $5M seller who did a VIP day - hadn’t filed taxes in 3 years and had no P & L at all!
How do you calculate the working capital required?
What is working capital
Robyn does not have an MBA background or a CPA.
Most of us are accidental entrepreneurs.
In the Amazon world, we use things in a different way to strict financials!
Keep inventory flowing, cover expenses to achieve effective cash flow management.
The higher your expenses and the lower your margins, the more you need to manage your cashflow.
Rolling cashflow
Think about 13-week rolling cashflow - in 13 weeks, I’m going to be negative in cashflow
So I have 12 weeks to figure out how to cover that
- lower expenses
Bring in more income
Lower outgoings
On Friday you have $42 in an account and on Monday you have $42,000!
Small plates
Mike M recommends you break things into a smaller plate - you’re more acutely aware it’s a finite resource. Like the envelope system for business.
So non-analytical people will be happier with it.
When you need money, it gets very expensive!
Debt
Debt can be a wonderful tool. It can be used to build or to destroy.
It can be an amazing tool to build a business.
Robyn’s business owners with no debt have fewer sleepless nights and less stress, but
They slow the growth of the business.
How do people end up in excessive debt?
There is a myth that more inventory is better. That is not quite right.
Robyn’s seen people go from $1-5M in a year in revenue and making LESS money!
What usually happens is that things are moving, because growth sucks cash, you know you’re making money but you don’t have any cash left in the bank!
So Amazon or a bank offers you large money eg $300,000!
It’s great for the 1st 3 months, you feel things are finally on the move.
Between 2-4 months later, if you haven’t managed that cash well.
If the inventory doesn’t turn over quickly enough, you’ll struggle to meet the payments
Then you’re out of cash now.
And then you take a bridge loan - I just need a loan in 3-6 months.
After 3 months, you take another loan and aren’t paying down credit cards.
But you have to keep buying stock.
Hidden, private pain
In PL world esp, everyone shares their wins, not their losers.
Eg Joe made 6 winners - and $100K
But we don’t know how many losers Joe had and how much profit.
This means that people feel “It’s just me.”
Robyn’s experience
Most businesses go through a period where cash is tight!
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