In this article series, I’m going to share with you how to get out of a Cash Flow Death Spiral (depicted above) without being a financial guru using my 6-part framework.
Unfortunately for me, I learned this the hard way.
I was in my late 20s and I’d just bought my first business with a partner. Things seemed to be going great and my future was so bright I had to wear shades.
Our sales started to slump, our cash flow started to suffer, and we found ourselves in a dyer situation.
Within less than two years of buying the company, my two financial partners had filed bankruptcy, I was in debt to banks and vendors for over $300,000, and all my savings was gone. It left me broke, depressed, stressed, and questioning if I was even cut out to ever be an entrepreneur.
I never would have expected what would happen as a result of this failure though…
Within months of winding down the business, I started to receive calls from other business owners who were going through the same Cash Flow Death Spiral I had just lived through.
After dozens of these cases – many successful and some not – I started to notice a pattern that separated the ones who got through it from the ones who didn’t.
This is the 6-Part Framework I’m about to share with you.
The 6-Part Framework for Getting Out of a Cash Flow Death Spiral
- Admit you have a problem
- Adopt the “I Will Die Before…” Mindset
- Focus on the Root of the Problem
- Create Multiple Options to Deal With The Problem
- Overcommunicate with Vendors & Lenders
- Get More Runway
Step 1: Admit you have a problem
You may think I’m joking, but I’m not.
Although deceptively simple, the ability to say out loud that your business really has a problem is critical.
The first reason why is hard to hear for some people.
The simple fact is, many business owners have a hard time admitting anything that appears like weakness because they’re predisposed to believe they’re superhuman.
And, much worse is the business owner who is so afraid to fail that they cannot admit to themselves they have a problem… if they did, then they’d have to come face to face with the sobering reality that failure was possible.
But… you need to face reality head-on in order to go to Step 2 of the 6-Part Framework.
Just like Alcoholics Anonymous, you need to admit you have a problem to be able to deal with it.
“But why?” you may ask. “What good will this do if I already know we’re struggling?”
There is a difference between a passive awareness of a problem and a named, claimed, and confronted problem.
Just like Alcoholics Anonymous, you need to admit you have a problem to be able to deal with it.
In my experience, until you actually look yourself in the mirror and admit the gravity of the situation to yourself, you’re never going to do what it takes to get out of this mess.
Remember: “Confession is good for the soul.”
