Hi, everyone. It’s Nishi Patel here from N-Accounting. I hope you’re having a great day. In today’s video, what I wanted to do is talk about the two things you can do if your business runs out of cash. So I think a lot of business owners have been there at some point, or they could be on their way there. And what I wanted do is film this video to just explain that there aren’t lots of options when it comes to fixing a cash flow problem. It only comes down to two things.
Before I go into that, though, I need some caveats in here. So when I say runs out of cash, I don’t mean like temporarily runs out of cash, like if you’ve got a one month gap in your cash flows which you could just go and get some kind of funding to fill, or you could just go back to all of your suppliers and say, “Hey, can I just pay you a little bit later?” What I’m saying is when you properly run out of cash, like when your business is broke. Okay? So, that’s what I really mean by runs out of cash in this situation, because otherwise I’m not going to be able to resolve it in two points. Yeah. And also, the other caveat is I’m going to assume your businesses run quite efficiently anyway, so there probably isn’t loads of costs to strip out.
So now I’ll get into it. So two things you can do if your business runs out of cash. Okay. Firstly, it’s just taking a step back to reflect and recognize that you are completely screwed. But I say that kindly, because it’s not about losing hope. What it’s about doing is recognizing that you’ve got nothing to lose. So if you are running a business that’s run out of cash, then your business is pretty much gone already. So what you’ve got to do is then you’ve got to… By thinking about this in that light, recognizing that you’ve got nothing to lose, it makes the next step much, much easier.
The next thing you have to do, point number two, when your business runs out of cash, is properly broke, not temporarily broke, properly broke, is you need to double your prices. You probably need to triple your prices, because this is the only way this has actually happened. You have not been charging enough. Right? So there’s no kid gloves anymore. You can’t go back to your customers and try and sugarcoat it. It’s, “Hey, sorry. I’m broke because I haven’t been charging you enough. I need to double my prices.” Point number one, understanding you’ve got nothing to lose. And then using that motivation that you get from understanding you’ve got nothing to lose to then double your prices is the only thing that is going to fix your business.
And when you double your prices, you don’t just double your prices. You cancel your payment terms. So you go to customers and say, “Actually, I need it upfront.” If your reputation’s good enough, they’re not going to bother, they’re not going to care, even. They will pay you upfront because they know you’re the only person that can get the job done to their standard. So I hope this video hasn’t been too demotivating, but what I wanted to do is anyone caught in this awful situation where your business does run out of cash, I just wanted you to recognize there’s really only one solution. Assuming you’ve done everything else efficiently, there is only one solution and it’s to double your prices.
What I’d like to do is just tell you a little bit about our Apex program, because we actually manage their cash flows for our clients. So what we do is we use a bit of software called Float. And Float works out what their cash balance is going to look like for the next 36 months. So you know what? When there is a challenge with their cash flows, we figure out months before it even becomes an issue. And you know what? Within everything, prevention is better than cure. So if you are interested in finding out about better ways to manage your cash flows, then get in touch with us. We’ll tell you about our Apex program and help you understand how your business can really benefit from it, from that cash flow management point of view. And remember, if you found this video useful, just remember to like, share and follow and subscribe, and I will see you at the next video.