COVID Punching Holes in Your Bank Account?
2 Ways to Punch Back - And Come Out on Top
by Connie Vanderzanden
A few pandemic-style punches to your business’s proverbial mid-section may have left you gasping for breath. That right jab back in March forced most of us into taking some type of pause. As we danced around the ring finding alternate funding options, we got a little tired.
Then, as we attempted to cover-up to protect ourselves, perhaps even playing a little possum hoping for a breather, that uppercut followed by a little Ali style rope-a-dope had our bank accounts throwing in the towel after we not only paid for 2019 taxes but also had to find funds to cover two estimated payments for 2020. ALL on the same DAY!
The opponent in this boxing analogy is not money. It is simply the circumstances and situations we have encountered so far this year which affected our money supply.
While this year more businesses than usual are feeling this cash flow punch, this is not a new fight. Many businesses approach funding for taxes the same way each year with the ignore and hustle method. While this method has worked successfully in the past, this year has allowed us to see the big gaping problem with this concept.
It is not sustainable.
Businesses that shifted from the ignore and hustle method to an intentional cash handling system had a different experience. In fact, they had more time to focus on innovation.
While it wasn’t all rainbows and unicorns, the businesses I partner with hustled their butts off to get funding, find alternate options to keep their team employed, and find safe ways to re-open. The intentional cash handling system they used for 2019 meant they already had the taxman’s money set aside, so they could focus a little more on keeping the business afloat rather than stress about how to pay the tax bill.
You may be saying, that seems all fine and dandy but right now, TODAY, I don’t see how to even get out of the ignore and hustle method. Cash flow is tight and every last penny that comes in either pays for bills I already have or decreases the debt enough to move forward.
How the hell do I get off this crazy train?
Simply acknowledging that you are on the crazy train and you have a strong desire to get off it is the first step. I’ll share the other steps below, but first a story.
Been There, Done That
I once lived that ignore and hustle method, so I get it. For those who are familiar with my background, it was that period of time from 2007-2014 when I chose to create chaos and growth in my business. The part I couldn’t figure out was how to get out of continued hustle mode.
My expenses were growing so I would hustle to find the revenue. New expenses required new hustle. It felt like whenever I finally achieved a consistent revenue stream, something would happen to pull the rug out from under me: a client would leave, a team member would quit, and so to soothe myself (I am a Natural Spender, after all!) I would say yes to a bigger expense item. It was my own private nightmare. On the outside I looked bright and shiny with all my shit together, but it was an entirely different story behind closed doors.
Sure, my expenses exceeded my means and yes, cutting costs would have made sense, BUT I had a dream and five years into that hustle and dream the weight of the debt I had created to get there was suffocating me. At that point, I didn’t feel like I had a way out. I felt forced to keep going.
And that’s the cycle that keeps us hustling. Shame, guilt, and our ego pushing us to stay the course.
Sometimes, as COVID has shown us, businesses haven’t built a sturdy enough foundation to keep going. That is a hard pill to swallow when you finally realize that. While some may close altogether, some simply need a step back to catch their breath.
Which is what I chose to do.
Power of Pause
So, how do you get off the crazy train of ignorance and hustle? You figure out how to slow down the train!
For cash flow, that means creating a pause.
When you are smack dab in the middle of the hustle, this sounds ridiculous and painful. At least it did to me. When 98% of your revenue has already been spent, money doesn’t stick around very long!
That’s the key point about the power of pause: to force us to take a breath. To interrupt our normal fight or flight mode of using money. To allow us a moment to make a different choice.
The first way is to create a physical separation between cash being received and how it is spent. Here’s how:
Have one checking account for all money coming in and another checking account to pay bills. It requires a trip to the bank to set that up and may take some time to unravel all the things but in the end, you will be forced to pause, reflect on what you have collected, and have a smaller container for what you spend.
Connie's Tip: Your existing checking account becomes your Incoming/Revenue account. The brand new checking account is for paying bills. This way less “things” need to change. Don’t make it harder than it has to be, or you’ll fall back into old habits!
I get it, you are in the middle of hustling for dollars and you don’t have time to worry about transferring money or overdrafts so let’s take a minute to pause and consider this.
- Take a breath.
- Now take a truly deep, all the ways to your toes, breath.
- Felt good, didn’t it? So take a few more.
- Take a moment to imagine what life will be like OFF that crazy train of ignoring and hustle. Would you have more time to simply think? To be in nature? Get that one thing done at home? Have an actual life?
- How willing are you to make a change in your current life and process to achieve that? Give it a number between 0-10 (0 representing that no effort or change will be taken; 10 representing that you are all-in)
Below a 7, you are not ready to give up your crazy train behavior. (No judgment from me, just remember that this means you’ll stay in hustle mode until you are ready.) The rest of you are ready for the next action steps, so keep reading!
Did you realize you just experienced the power of pause? That ability to simply slow down, check-in, and make an intentional choice AND the world kept turning while you were at it. Creating a pause in your cash flow will be slightly uncomfortable, at first, and then it will become an essential piece of the foundation that your business needs to successfully build upon.
Pull the Emergency Break (aka Quick Action Steps)
The second way to create that pause still requires a bank account, but this option focuses on behavior and gives you a quick WIN. I posted this challenge on a previous post, but to make it easy, here are the quick action steps:
- Set-up Profit account - All you need is a basic savings account at your regular bank. No checks needed. Look for an account with no fee.
- Give it a Job Title - Rename the account EVERYWHERE: in your accounting tool, online with the bank, on the bank statement. Make sure wherever you look you KNOW that the intentional purpose of this account is to save your Profit.
- Transfer 1% of all revenue received - Work with your existing habits here. When do you acknowledge the money you receive? Is it daily? Weekly? Monthly? Whenever you make deposits or receive payments or update your accounting, make the transfer. You want to transfer funds as close to when you receive it as possible - otherwise, your human nature will be to spend it.
- Leave it there, and simply let the magic happen. This is not your Plan B. There is no borrowing. Just leave it alone.
- Work the system for a minimum of 90 days. Contact me for the next steps and your reward.
Read the post to find out WHY I feel an intentional cash handling system is key in creating a sustainable business. Here’s the quick answer to WHY these steps above?
- Prove to yourself that YES saving profit is easy and that the basics of the cash handling system can work.
- Build your wealth confidence muscle and there is power in building a reserve, no matter how small that is.
- Retrain your mind from “spend it all” and release into the knowing that yes, Money has your back.
Putting it ALL Together
To answer that question, how the hell do I get off this crazy train, is to create a pause in our system of hustle - that fight or flight mode we naturally go into during times of stress.
I gave you two action steps to create a pause.
- Separate incoming from outgoing money
- Save your Profit using the Quick Action Step challenge
While I do recommend tackling these together, you can also opt to do only one or the other to get started. That is the one consistent problem I see businesses make when they start taking action in shifting their relationship to money. They tend to jump all in, all at once, and then realize, they forgot to learn how to swim first.
Either of these steps will teach you how to swim, build your confidence, learn something about yourself along the way, and give you a firmer foundation to add on more tools.
Back to our boxing analogy, consider this your eight-count moment. When a boxer is knocked down, the referee counts to eight, giving the boxer time to recover or to better assess the situation. The boxer isn’t out of the fight, they simply have an opportunity to take a pause.
So what will you do with the pause? Do what you have always done and get the same results? Or take the time to try something new?
If you want to chat about the next steps, below is the link to my calendar to book a complimentary 30-minute conversation. Want to see the Going Beyond Revenue Cash Handling System, no problem, here is the link to my resource page to grab it.
(Special thanks to this site for helping me with my boxing terminology!)