Jack Reacher drawingDo you know Jack Reacher?

The 6.5”, 250 lbs, hands like coal shovels, protagonist in Lee Child’s bestselling books.

Reacher’s main chareteristics are an unorthodox investigative style. And his ability to rile his opponents.

He solves problems in , shall we say, unusual ways. Often with significant body counts. And Reacher thinks outside the box.

Is a 20% Reduction in Outgoing $ Cash in 60 Days possible?

Yes it is.

                                                                                  How so?

20% cash flow savingsThink outside the box. Think like Jack Reacher.

Be determined. Be focused.

Fire bullets like Reacher.




Example: Paying Suppliers

3 Steps cost reduction


In Summary

The Reacher Bullet approach works. Take the time to really focus on Supplier Costs:

1 Get organised. It does not take much.

2 Do it. Don’t delay and start. Document and review.

3 Get the Benefits. Notice the cash outflow improvements

⇒20% cash outflow reduction in 6 months. Or better.

⇒It works. I have seen the Cash Flow Grin. 😀 

I want the Cash Flow Grin too!


















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Poor Cash Flow is killing businesses worldwide – mercilessly.

Business failures chart

Did you know that worldwide business studies agree that poor Cash Flow is the main reason for businesses to fail?

Indeed, 90% of small businesses fall victim to poor Cash Flow. Sooner or later.

It wrings the lifeblood out of them.

Human Costs

Add the human cost. Disappointment, Frustration, Partnership breakups, Bankruptcy. Plus significant Heath issues and the Social Stigma of perceived Failure. In Business and Life.

I always expel a sigh of relief if a client of mine shows me their cash flow statement. Then I know they have a basis for better decision making.

Some argue it is an Art to Balance cash going out with cash coming in. Well, it is not.


Why is this Business Killer so prolific?

It happens for 2 main reasons:

A. Businesses run out of money because they struggled to find a viable business model.
Simply, the business does not make enough money. Not generating sufficient income.

B. Businesses run out of money because they don’t plan their Cash Flows.


Cash Flow Forecasting is the elixir to business survival. Essential like breathing for humans.
I am a strong believer in a rolling 12 months cash flow forecast. Perhaps even 18-24 months.

And I still have a preference using the old Excel spreadsheet method.

Why Cash Flow Forecasting Excel?
Because it forces one to think and manually enter every possible future transaction: Sales, Expense, Tax.

Simple is Best

No need to get fancy. Keeping it simple and meaningful.

Optimism is good. Pipe dreams are dangerous

Optimism is a key trait of being human and small business owners in particular.

After all, what realistic person would persevere in the face of so many obstacles, so many naysayers and so much stress?

Whilst optimism is critical for a new business owner, letting it compromise your objectivity can be dangerous to your Cash Flow.

You may be playing into the hands of the Silent Assassin.

Set Realistic Sales Forecast

  • An objective and realistic Sales Forecast.
  • Based on historical Evidence and Real numbers.
  • Use Actual past sales data from your own business
  • or other businesses in your industry as a basis for tracking trends and predicting future sales.

This information, along with some objective feedback from people around you, will help you come up with a realistic future sales projections.

Sales Forecasting can be especially difficult for the first few years of business because you don’t have past sales figures or as much experience to draw from.


This is where working with a mentor from within your own industry may be extremely useful.
A good business mentor can offer their own experience to help you project future sales, and even offer historical sales figures from personal experience to help you predict upcoming sales volumes.


The old saying: ‘It takes money to make money’ remains valid.
But, unfortunately, this common belief can make many a rookie entrepreneur fall prey to gross overspending. Especially in the first few months of business.

Spend wisely

The reality is that while, yes, it does take money to make money, not all startup expenses are created equal.
Starting or growing a business involves plenty of clearly beneficial expenses — costs that will benefit your company’s profitability in measurable ways.

Keep eye on the ball

If you want your business to make money, keep your eye on the Ball = Expenditure.

Review the benefit of every single expense. After all, every dollar you spend on your business is a dollar that is ultimately taken away from your profit margin.


Along with your Sales Forecast, create a realistic and meaningful itemised Budget. And stick to it.

Break Even Point

  • Calculate when you plan for your business to break even.
  • Keep in mind unexpected expenses or opportunities.
  • Go back to your projections and calculate how those purchases will delay your break-even point.

Keep the Assassin at Bay

  • So, you’ve set realistic expectations for future sales.
  • You’ve prepared spending budget, and
  • you’re doing everything possible to make your clients pay up.

These three changes alone will do wonders for your company’s long-term cash flow. But without tracking your day-to-day cash flow, you may still find your business in a tight spot.

Tight Spots

For retail companies, the months just before the holidays are a time when cash flow can be particularly tight. You need more inventory from your suppliers to prepare for an influx of sales, but if those supplier payments come due before your sales actually happen, you may have trouble paying bills on time.

Cash Flow Forecast Statement

Using a Cash Flow Forecast Statement will help you track your inflow of sales and outflow of expenses and tax during a specific time period (e.g.12 months).

This will help to anticipate ‘dry periods’ when you’ll have more money going out than coming in, so you can plan ahead for those difficult periods.

Without one, you’re just guessing at whether you’ll have the money you need when you need it, and you’ll increase your chances of facing late payments and other penalties on past due invoices.

The Cash Flow Killer loves Guessing Games. This gives him the upper hand.

Safety Buffer

No matter how many safeguards you have in place to protect your company’s cash, hiccups in cash flow are a business reality. This may be no big deal if you have a cushion of savings on hand. But if your company is working with a zero account balance, one slow sales month could mean instant disaster.

To safeguard your business from cash-flow issues, maintain an account balance equivalent to at least two months of operating expenses. That way, even if you experience unexpected stalls to Cash Flow, you have reserves in place to protect yourself.


Cash Flow issues are one of the greatest challenges of business ownership. But if you stay objective about your business, rein in unnecessary spending and stay alert to potential pitfalls, you’ll be head and shoulders above your business peers in your potential for long-term business success

Review, Review, Review

Because Cash Flow Forecasting is so vital go over it again, and again. Test assumptions and review with someone you trust: Mentor, another business manager, your accountant or bank manger. 

Don’t be upset if someone points out flaws in your forecast.

Surplus or Deficit diagrammeDecision points

Cash Flow Forecasting flags in which months you can expect to see a cash deficit, and which months you can expect a surplus.

More importantly, you’ll also get an idea of how much cash your business is going to require over the next year or so to survive.


Cash Flow Forecasting is also useful for decision making regarding the next capital project. Growing usually requires investment.

Benefit of Cash Flow Forecasting

  • (Good) Cash Flow planning is the lifeline for business survival.
  • It puts the business in good stead with attracting investment or joint venture partners.
  • It silences the Cash Flow Killer.
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Morning KissImagine: Monday morning. You jump out of bed. Full of Energy and Bushy-Tailed. Punching the Air. Because your Cash Flow KPI is >1!

Coffee is optional at this point 🙂

Despite social media hype, constantly changing market conditions and demanding customers.

Cash Flow is remains the undisputed King.

1. Fundamentals

The good News:

  1. This Cash Flow KPI is easy to implement:
  2. You need not be a qualified accountant.

A very useful Cash Flow KPI is Working Capital.

2. What is Working Capital?

The amount of Net Cash in your business:

3. WC Ratio is the KPI measure

The Working Capital Ratio is Assets over Liabilities. In this example it is 1.09 :

A WC Ratio of 1.0 or greater is considered acceptable for most businesses. A high WC Ratio (greater than 2.0) indicates a financially healthy position. Perhaps ready for expansion or a long holiday at Malibu. A low WC Ratio (less than 1.0) indicates difficulties to meet short-term financial obligations, and the inability to take advantage of opportunities requiring quick cash.

Furthermore a low WC may flag a potential bankruptcy risk due to low income expectations.


The WC Ratio is an excellent Cash Flow KPI to provide an initial assessment of your own or someone else Cash Flow position. It also might assist in checking potential businesses acquisition quickly without requiring costly accounting expertise.

However, one needs to consider a number of other factors to gain a comprehensive overview of any Cash Flow position. Other factors need to be kept in mind such as the duration of liquidating assets (eg inventories) into real cash.

About Markus Schwarzer, I work with SMEs on reviewing, designing and implementing KPIs for Financial Dashboards. Find out more

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