Cash is King Part II (So now what? )

By now you have settled into the new normal–working from home, balancing home activities and work activities from the same house/apartment/room/dining room table.  Being on too many zoom calls, team scrums, virtual company meetings/happy hours.  

Hopefully, you have also gotten a good handle on your actual cash flow? (see cash is king part I). You now have “actuals” for the month of March to see where the money comes from and where it goes (again, not the accrual numbers your account shows your actual cash in and cash out). You probably have trimmed any fat (maybe some meat too, hopefully no bone), applied for a PPP loan, pulled down any credit lines, commiserated with your support group, contacted your investors and been reassured (I hope) that they are sticking with you. Now the bigger question is, “now what?’ Where do we go from here? It’s time for scenario planning.

Hunter Young, who heads our Connect to Capital program  former investment banker and Excel jockey) built the next iteration of our cash-based planning tool. This version allows you to build several scenarios and with a click of a button, you can quickly update the cash flow moving forward for the next 12 months (or more). In this version the scenarios assume you can alter the cash coming in (different products, different customers etc.) and the variable cost of the origination (the “fixed” cost stays constant).  Again, for each scenario you need to list your assumption. I would also encourage you to make the scenarios significantly different. These are just models; they will not be exactly so subtle small changes aren’t going to be readily noticed. Model scenario A, then model a completely different scenario B and then perhaps an altogether different scenario C. This does require you to make projections (educated guesses) about the future revenue, costs etc., but if you can quickly and easily see where you are going to be cash starved and hopefully, you are cash rich. 

We have also set up an easy-to-schedule “ask me anything” page. I am starting out with “office hours” 4 days a week; if it turns out not to be enough I will add more. Hunter Young will be adding a similar service in the weeks ahead.

So, hunker down, keep in mind cash is king and remind yourself we are living in interesting times. Historians will study what we do now and write books about it.

get the latest