This is Barry mold still getting small business unstuck, you are still stuck around managing the cash and finances in your business. And it's because your revenue and expense forecasts are just way off. You let your ego control your checkbook. Instead of making decisions based on your financial statements. You don't know the difference between a fixed expense and a variable expense and you're also stuck because you don't really know the true cost of an employee. Let's take each of those one at a time, a fixed expense.

As we talked about previously, it is an expense that does not change from month to month, based on your revenue, how many products you sell, or the amount of services that you offer. A variable expense does change based on Your volume, you want to keep your fixed expenses as low as possible. And as many expenses variable as possible always say, try to keep your variable expenses actually available, tie any cost to some kind of actual revenue, and you'll have a much more profitable company. Another way to get unstuck is that you should reduce your overhead make as many of the people working in your company, not a fixed expense, try to tie them to revenue that comes to the door. And this can be done through project work are freelancers or consultant or other kinds of outside resources. You can try to reduce your rent during difficult times, landlords actually will let you reduce your rent.

You can also hire an accountant actually to reduce your expenses so you're not spending so much time doing the thing that they should actually be working on. You can also reduce your expenses by law During your employee turnover, remember statistics show that when an employee leaves it actually cost you 33% of that person's salary to replace them. Let's discuss how to improve your accounts receivable. The money that's owed you. Remember, the squeaky wheel always gets the grease, set a goal of how often you want to collect your money. That should be as few days as possible, because the longer that your customers hold on to your money, that's the cash that you cannot access in your business.

This metric is called DSO or days sales outstanding. Go out there and ask for your money within the period of time that you set the expectation for most people want to pay their bills. When you send an invoice, make sure that your customer actually got it. Then once you confirm that, ask them when it's scheduled to be paid. Set a tickler for your When it's going to be paid and the week before, ask them if it's going to be in that check run. If you do not receive the check that week, call them up and ask why it wasn't included in that check run.

Again, the squeaky wheel here, we'll get the grease only offer credit to customers that actually deserve it. Credit is not a right in any small business, it actually is a privilege. And it's much better to get some of the money upfront or some of the money or pay as you go and install a plan than try to get it in one lump sum. You can also improve your accounts payable what is improving accounts payable mean? It's just the opposite of grooming or accounts receivable. We want to lengthen the time that we actually pay our customers earn better credit from your vendors by paying on time and making systematic payments, developing trust and then asking and earning longer term payments.

Don't take longer term payments. If your terms are 30 days, pay within 30 days. But after you've done that, for Six months or a year, see if you can go to 35 or 45 days, they just might agree. Another place you're stuck is that you have way too much inventory for your size business. inventory of products sucks cash out of your company that you're never ever able to recover, makes you look at these three things improve your inventory turnover. What that means is how long does a product actually stay in your inventory before it's sold.

The higher the number, the better. Your reorder points. Make sure you know when you're reordering that product. Only reorder as much as you want for your fill rate and only order as many as demand really asked for. You also need to have a cash flow plan inside your company project your monthly sales conservatively. A lot of advice that I get is whatever you think your sales are going to be cut in half and double your expenses.

Make sure that you monitor your receivables You're changing inventories your payable and make any adjustments for growth. Remember that inventory might go up, payables might go down, and receivables might go up all the same month hurting your cash. But that may mean that you're really growing your business. And one of the most important things is because typically is a very large part of any small business owners cost is understand what the true costs an employee is. It is not just their salary, it's their compensation, plus your share of the taxes, which depending on which state you're in, is about 11%. paid time off increases that cost by 1%.

Because you got to usually get someone else to do their job. And health insurance can cost upwards of 5% of your salary, maybe have a 401k or retirement plan that could cost the match up to 6% perks like bonuses and public transportation, typically at about 3%. Someone's going to manage all these people that has 1% cost and work tools like a computers and other things cost upwards of 4%. This means that it could cost 30% more for your employee than their actual compensation. And this doesn't include downtime for your training. In any kind of services business, the key metric really is employee utilization.

In order to get a 50% gross margin, which I believe is the minimum for any consulting business employees need have a billable rate of at least 85% of their time. If you do the math, and there's 2080 hours in a year than 85% billable is 632 billable hours, every single year. With all these things, make sure you do not outsource the math, learn the metrics yourself so you can understand when they're presented to you. Let's talk for a minute about budgets and forecasting. The biggest mistake that a lot of people Making budgets and forecasting is that they set a budget for the year. And then after a month or two, they find that they're not hitting their budget.

So they go out and they change the budget they lowered or they raise it just so they can feel good about hitting the budget. That's not what budgets is all about. set a budget, set an expectation, and then measure yourself against that expectation. Again, when it comes to forecasting, try to be as conservative as you can, based on historical results. And you'll get close to that. If you reduce your income and increase your expense expectation.

You'll be a lot closer to where you really want to be a few more financial principles to conclude this video. Remember, too much money can actually make you stupid. Now, I know some of you are saying God, I hope God makes me a blithering idiot. But when we have a lot of money in organization, we have a tendency to waste it. So try and stay frugal. Remember, it is your money.

Be careful that you don't grow yourself. broke. As we talked about growing the business puts pressure on cash flow. So ensure that you have enough money and cash to grow your business. Don't worry about getting rich, don't worry about selling your business. build your business first and getting rich will come later.

Most overnight successes take seven to 10 years. We do this service for a lot of entrepreneurs in this country, when we have those great success stories where someone started a company yesterday, and the next day they sold it for a billion dollars. Now I'm being a little bit sarcastic. But a lot of businesses that have success have been around for 710 or 25 years. Remember, overall, it is your business. So watch your money and be cheap.

Think about how you're going to strive for a minimal achievement. replay this video, what's the one change you're going to make? So you can this year you can make a ton of cash and stop the insanity. This is Barry Manilow Still getting your small business unstuck, having a great day.