Here’s something you really need to know.
You’re STILL in a Pandemic.
You’re Still in a recession.
Things are NOT back to normal.
If you’re still in business right now you need to be ready to keep going.
I cannot stress this enough to you.
The way you keep going is to not burn cash.
If you run out of cash, you go out of business.
If you’re not burning cash right now, you’re winning.
Don’t be fooled by these online wizards that tell you about the one fluke that got 474 new online clients since March 16.
The way to survive this climate is to get to cash neutral.
I’ve talked about this before but it needs to be mentioned a LOT more.
Here’s an excerpt from my new book that explains this in more detail…
Excerpt from Chapter 6: Building a Mountain of Cash Through Financial Fitness, pages 55-56
If your business generates 20K in revenue and spends 15K, you have 5K in profit.
On the surface, this look good.
But as we go further, things don’t look as nice because the 5K in profit needs to go to 3 places before we can account for an increase in cash.
You need to take 30% of the 5K ($1500) and put it aside for taxes. No one wants to get caught with a big tax bill and no cash in the bank to pay it.
The next category is owner’s draw.
Now, you have every right to run personal stuff through the business.
You also deserve to pay yourself as much as possible but know this will impact cash flow.
Let’s say you pull $3,000 out of the business for living expenses.
Finally, if there is any debt this is usually not accounted for in your profit and loss statement.
Let’s say you have 1K a month in debt repayment.
This will create a negative cash flow of 500 per month.
In other words, in this example you are burning 500 per month in cash.
This is not where you want to be.
In an ideal situation, you want to be building cash.
But, before you start building that cash cushion you need to survive.
Survival in a pandemic comes in the form of something called Cash Neutral.
Cash Neutral is a gold star in a recession.
It essentially means you burn no cash, so in the example above we would need to either increase revenue by 500 or decrease expenses by 500 to be able to get to cash neutral.
This should ease the minds of many hard core driven gym owners that are more than frustrated they’re not seeing a big growth rate.
You’re winning if you’re cash neutral.
The only way to get a copy of my new book is to do a 60 Day Free Trial (actually it’s $1)…Of my new coaching program called the Marketing Master Insiders Club.
My new book comes as a bonus with your free trial.
The program is not yet open but is taking people on the wait list.
Would you like to get on the list?