The Unglamorous Decisions Founders Make When Cash Flow is Tight

0:00Let's talk about cash flow. I run a seasonal business. I run some university. We make more money in the spring and summer than we do in the fall and winter. I'm recording this in January where cash flow is extremely low. In fact, it is so low that our income does not cover our expenses in during these months. This has been true in my business since basically the beginning and I guess we're talking 20 years now. The question I got on, I think it was Twitter or somewhere, was like, what are the unglamorous decisions founders make when cash flow is tight? So, I wanted to just talk about a few things that I do when this happens. I don't like this, but at least it's predictable. It's June and we're like, oh shit, we didn't make enough money

1:02to cover payroll or something. This is predictable. For me, there's one big thing that I do. Which is during this, and it's probably pretty obvious. During the summer, when we are making a bunch of money, I tuck some away for winter. Meaning what I'll normally do is I will either just keep the check, so we just have like one checking account where all the money comes in and out. And I will usually just keep that padded. And I'll keep it padded even when it's like, oh, we could take that money for ourselves in the summer, like that's profit, right? I will do some of that, but I will keep my checking account padded more than normal, knowing that heading into the off season, we're going to need it. We may need it, we may not need it.

2:08Now, when I say we don't cover expenses, we do cover a lot of them, but not all of it. So we're going to need extra cash to cover things like payroll. And if we have to purchase products, like books or shipping material or anything like that, we have to pay for shipping. We have to pay for apps and things like Clavio, which is our email marketing service. That's still cost like $2,000 a month for us, even in the off season, when we're not sending that many emails, and we're not making that much from Clavio. But and we still get paid the same amount. We don't, we don't normally we don't take a pay cut, although we could, we could do sort of like a teacher salary type of thing where we either just beef up our salary during the fall and winter, or sorry, during the like spring and summer and fall even, and then sort of like take a temporary

3:10pay cut during the winter time, or in in some pool cases, they will actually, what do they call it? They will lay off their employees for the winter and then rehire them in the spring. And during that time, they'll collect unemployment, which happens, which is crazy to me, but you know, when they can't afford to keep people on, they basically just temporarily let them go. Similar to like what teachers do, right? Like in the summer, teachers are technically let go of their job. And I believe from from dating a teacher in my past that they had the option. And again, if I'm speaking out of turn, turn here, like let me know. But for my understanding, they have a choice. They can either take their salary over the course of 12 months, or they can take their salary when they work. And so they make more, but they'd have the summer, where they're not making any money. They have no income coming in and they usually go get a

4:14second job or something like that. So we could do something like that. But we choose to do the former, which is we take the same salary all 12 months. And because of that, I have to mentally and physically prepare for the limited cash flow that we have in the off season by storing some cash or padding the bank account. Now, sometimes I will temporarily move that money into a high yield savings account just to collect some interest off that padding so that it's not just sitting in the checking account losing, you know, losing interest basically or losing to inflation. So and so what I'll normally do is I will so I'll have that money in a high yield savings account ready to move over if I need it. But I kind of like the act of just sort of playing it month by month and going, okay, we're operating like here's how much money we made.

5:19Can we make some strategic cuts here? Can we do anything interesting here? You know, is there any place we can save money? And that's it. It's just a good time for us to sort of like edit our own expenses, which I believe every business should be doing all the time. I wrote a tweet recently that was like, businesses don't fail because of marketing, although it's a big one. They fail because of accounting. And this is just something I believe. And I kind of believe it because I've seen it happen. I worked at a business, it was a seasonal business, it was a pool business where they weren't making any money every year. But they just weren't making enough money. And my suspicion was, they were making enough money, but they were just taking too much of it. They were just, they were spending it wrong. And so I basically took over

6:23all of their accounting. Now this is, by the way, I'm 21, maybe I'm not a math guy, although I do like math, but I have no business. Not an accountant, but I had one theory, which is, and this is, and by the way, when I was 21, I didn't even do this for my personal life. But I was like, if you have no idea how much money is coming in and you have no idea how much money is going out, like to the penny, then how can you make any decisions? Like how do you know? Maybe you are making enough money. And so all I did was update their accounting software. I switched over, they were using something called Peach Tree, which was a DOS program, and I switched them over to QuickBooks. And I did like one day of complete inventory of the entire, it's just a small place,

7:24by the way, it wasn't a huge store. Maybe 400 square foot store. Maybe 500 square foot. So I did a complete inventory of everything. I set up a system where we had to take the money from the drawer, counter it every night, put it into a, a safety deposit bag, and drop it off at the bank every night. Now that may sound like, oh, that's how businesses work. Yeah, but this company wasn't doing that. It was a small mom and pop store, and they were just using the cash register as their, as their bank, right? They were just saying, like, if they had to go to lunch, and he went to the next store to the pizza spot, they would just open the cash register and start taking cash out. I'm like, what are you, what are you doing? They're like, well, I got to go get pizza. I'm like, okay, use your own money. They're like, this is my money. I own the store and I'm like, oh my god, no, no. What are you nuts? And so I basically forced them to just track stuff and to

8:27just have a system. And guess what? That year, they were the first year they were ever profitable. And I don't think we made any more money. I just think we tracked it better. That's it. So I think like, yeah, most businesses fail because they suck at tracking. And you don't need any fancy software. A fucking spreadsheet, man. Like, yeah, and it's hard and it's boring. But when you, like, we track every single expense, like we have, you know, especially in our type of business, the online business, you have a lot of subscriptions for stuff. And so not only do we have subscriptions, but we have personnel, like we have, you know, salary, we have, I pay for an accountant every month. I pay for our phone bill, our internet bill, our health insurance bill, like all of these things I pay for or the business pay is for every single month. Well, if I don't know what that is,

9:31then how do I, how do I know right now that we don't make enough money to cover expenses? I know that because I track it. So then if I track it and I could see it all in one spreadsheet, which took me what, a day to set up and then I have it forever and I just made a process for myself that, hey, the beginning of every month, enter in these things. And some of the things you don't have to enter, they're, they're just spaced out every month. So I look and I say, can we do this? Or I look at all of the expenses, I say, what can we cut? Like, are we paying for software that we don't use? Well, if we're not using it, cut it. Now, software for the most part, I've learned is like, that's, you're not, that's not a big spend. So you're like, yeah, I mean, sure, cut it, you should cut it. But it's not probably not going to save your payroll, right? You know, like, I don't believe in the idea of like nickel and diamond things. You need to, like,

10:38that's the old adage of like penny wise dollar foolish, right? And I have a story where my, I work, oh my god, I worked at this other pool company, but they were a pool slash janitorial supply store. And I kid you not, I kid you not, my boss, the guy who owned the store, his name was on the building. He would reuse trash bags. So he wouldn't just throw the trash, like, if, if our trash got piled up in a trash bag in a trash can, he would empty it out by inverting the trash bag, re-inverting it and then saving the trash bag. We worked at a janitorial supply store. Trash bags were basically free. You know, we're paying wholesale prices for the cheapest thing in the world. And trust me, it wasn't an environmental thing. Trust me when I say that.

11:42He just was a business owner that was penny wise dollar foolish. So I'm not saying that cutting things is foolish. I just, just, just know that, hey, we pay for this plugin and it's like $2 a month and when you space it out over 12 months, all right, let's cut that. Yeah, but that's not a big expense. So you're not going to, you're not going to make payroll by cutting a $2 a month expense. That's, you know, or, or doing some like, you know, weird accounting trick to kind of save money and these little tiny things and it's like, it does add up but not to a significant amount. So you have to make really big cuts. And I love doing that. I love making huge cuts to my business because it, it just forces me to really simplify everything. I, to, all right, so it's the beginning of January as I'm recording this. I haven't even looked at, because this is, I'm recording this on the weekend. I haven't even looked at our accounting for the last month, for the month of December.

12:46So I can just tell you from experience that in the month of December, we did not make enough money to cover our expenses because I know what we pay our team. I know what I pay myself. I know how much email marketing costs like I know the big expenses. And I also know that a lot of our expenses hit in January, which is kind of dumb. But, you know, I just know for a fact that we didn't make it. I also know that we had to order some stuff. So order some products. And so we have to do very, we have to make very unglamorous decisions. And these unglamorous decisions are in the form of a fucking spreadsheet. And it is, that's all it is. And it is looking at numbers and it is making hard decisions. One of the big decisions that I made last year in 2025 was cutting all ad spend. The reason for doing this, and this is like, I never cut marketing budgets, usually. But in this case,

13:54the marketing budget was working in that we were spending money and we were covering the cost of spending that money. But we weren't profiting because our business model was incorrect. It still is incorrect. And we're working on fixing that. And I've talked about how we're going to fix that in other episodes. So I would, I would check those out. But we don't need ads. We spend all of our time in effort creating organic content. And so we are making sales through organic content. I don't need to pay more money to get more eyeballs and break even on that, especially if our business model is not set up. And that is a bit, that was a big expense. We're talking thousands of dollars a month. So I just cut it. And I said, I will go back to paid ads once I can successfully track that a customer earns us at least like two to three hundred dollars per visit. Or not

15:05per visit, but like a customer is like worth two or three hundred dollars to us. Right now they're worth about 50. And that's not enough to run ads. So we need to improve that. But it was a hard decision to make because I'm like, it's technically working. It does work. There are other huge expenses like, I mean, our email marketing budget is like two thousand dollars a month. That would be a huge one to cut. But we send emails every month, even in the off season, because we have our hot tub stuff. But it doesn't pay the, you know, yes, email does cover its own cost. But and then some. But again, still not enough to pay everybody. Other decisions that I've made in the past have been letting go of people, not temporarily, although I've thought about it. I thought

16:06about, you know, if my team was a little bit bigger, I would say, okay, let's, let's do that whole layoff thing, except, you know, they can collect an employment, I guess, but they're contract, so they're contract, they're so it doesn't, they really can't. So I thought about that. But yeah, I don't, I don't do that. But I have converted full-time employees into contractors for numerous reasons. And this is that, this is a hard one to do, especially when you commit it to being like, yeah, I need this employee, I need this employee. And it turns out that it's like, well, it's not really a full-time thing. And that sucks. That's a shitty decision to make. And cutting people is a shitty decision to make. I've done it before. Sometimes it's not that shitty. Sometimes it's

17:07very lethargic. No, not lethargic, cathartic, because, you know, they were terrible, or it was just costing so much money, they weren't really making any money for the company, and that's not always feels good, but those are like, those are shitty decisions. But yeah, to kind of sum it up in a very succinct way, these decisions are not made with gut. They're made with numbers. They're made with spreadsheets. And if there's anything to take away from this episode is, you need to know what your cash flow is, and you need to know what your outflow is. You need to know it. You need to know what's coming in and what's going out to the penny, to the penny. We track, I'll tell you what I do. I track everything through QuickBooks. We use QuickBooks still. It's been many, many, many years.

18:09Since I was 21, I have been using QuickBooks for accounting. And I, and I, you know, you have your bank accounts hooked up. We have one checking account and one credit card. So it makes things very simple. Things go out of the credit card, and then the checking account, things come into the checking account, and then the checking account pays the credit card. That's kind of how it works. And so because it's so simple, you can look at it in QuickBooks and go, okay, here's what's coming in. Great. That's the checking account mostly. There's a few things that go out of the checking account like things that don't take credit cards. Health insurance don't take credit cards, mostly insurance or like, yeah, they don't accept credit cards or like payroll goes out from checking those sorts of things. But most of our like micro expenses or even are like purchases and our shipping all comes out of our credit card. And that, look, I'm not here to advise you in any

19:15sort of way. The reason we use a credit card is because I am so anal for lack of a better word about paying off the credit card every month. I have paid off my credit cards, both personal and business, every month for the last, I don't know, 12 years. And the reason I use a credit card is because I want them points, baby. We use those points for personal reasons. It's basically extra money to me. If and only if you pay off the credit card every month. And not everyone's good at doing that. I recognize. But it is something that I've, I'm like, absolutely adamant about. And so that's what I do. And I look at quick books every month. And I see what's coming in. I categorize everything myself. We do not have anybody doing our books for us. I do everything myself. It takes me

20:215, 10 minutes once a month. Okay. But I can see everything going in and out. Again, our business is tiny. We don't have a very complex business. And I can make, and I'm the CEO. So I can make hard decisions. I can look at and say, um, wait a minute. What are we, what's this we're paying for? What's, is it's a plug-in? Oh, we don't use that anymore. Delete it. You know, go in, cancel the account. Okay. Cool. Moving on. You know, tiny little things like that. Or like, yeah, we had that big expense that came in this month. All right. Well, we need to shift some money around. Let's move. Let's move some of the cash savings that we had from our, from the summer. Let's move that in the checking account. That way we can make payroll next month. Or hey, you know, we may need to take a pause on hiring this person or paying this out or pushing this back. You know, like, yeah, sometimes like right now, we can't make big purchases for the summer.

21:24We don't have the cash flow. So we have to wait. And you know, that's fine. You wait. But yeah, for me, it's just like looking at QuickBooks, checking things in and out. But on top of QuickBooks, I also have a spreadsheet. It's called my budget spreadsheet. I keep one every year, a new spreadsheet every year. And that spreadsheet has multiple tabs. One tab is sort of a dashboard tab where I collect everything. The second tab is expenses broken down by category. So we have tech slash software. We have advertising. We have personnel, which is salaries. And then we have utilities, which is like the phone bill, the cable bill, health insurance, meals and entertainment, travel expenses, things like that. And I look at that. So that that spreadsheet is sort of an average. It's sort of like a way for me to look at like, oh, what are we spending our money on?

22:26Where's the recurring revenue or where's the recurring expenses? And then I can see that and make changes there. And I like highlight things and say, okay, like, whatever. So I use a combination of both. The budget is really just like a much easier overview for me to see literally what we're paying for because QuickBooks has profit law statements, which are great. But then if you want to look at like, okay, well, software and tech, we're spending this much money. I have to click into that to see what we're spending on. And then it's not really broken down very easily. So the spreadsheet just helps me to see things sort of an overview. And I have to keep control of that manually. And then I have another tab for income. So I just write down what we made, you know, manually. And the budget also has like the previous years numbers. So I can kind of see if we're like climbing up, climbing down and like what sort of projections I can make for the following year. So I think it's

23:29kind of helpful. I do both. It just gives me, I spent a basically an entire day every, every month just living in this world of what's going in and out of QuickBooks, what's going in and out of our budget. And then I also keep a journal where I write down the all the like specific tasks that we did in the business. And then our, our, what I call Rosebud Thorn, which is what went well, what didn't go well, and what we're going to focus on the next month. And that's just a journal I keep. It's mostly just for me. No one else sees it. And then going forward, starting in January, 2026, I'll be filming all of this on a Loom video and sharing it with my team. So that everyone can see what's going on in the business. So yeah, it's not fun. It's, especially this time of year,

24:30it's like the most, it's like, I'm not looking forward to doing it. In the summertime, I kind of like it because, oh, we're making good money. You know, and it's like, oh, it feels good. You know, in the winter time, I'm like, fuck. I'm like, geez, okay, I'm going to cut that. Or, oh, shit, I got to move money in from the, from the savings account. You know, or I got to make this really tough decision. Maybe I got to, you know, stop this huge spin somewhere or I don't know. Or just push pause on some stuff. Sometimes, it's like, because of our season, all it's like, the money comes back. We know it comes back. We know when it comes back, which is why I'm not, it's much easier because it's predictable. But it's like, what I do is go, okay, like if we want to make this big change, if we want to make this big purchase or whatever, and now is not the time to do that. We're just going to push that expense into the late summer.

25:36And we do that quite a bit. So, I don't know. I hope that's helpful in some way. Again, big takeaway. Track everything. Track everything. If I've learned anything in this life is simply measuring is what makes things get done, right? What's the phrase, what gets measured, gets managed, something like that. It's not really, it's just like a, a iteration phrase, but it's not, doesn't really make any sense. But the idea of being that like, hey, if you weigh yourself every day, you are constantly monitoring your weight. Chances are you'll make decisions that day that lead towards weight loss because you're monitoring it simply by monitoring it. That's it. So, let me know what you think. Shoot me an email, madatjivinesi.com and I'll talk to you next time.