Debt | equitybydesign

Let’s Talk Cash Flow, Part 2

July 5, 2017 by Monique Lusse Leave a Comment

You’ll never find a company with positive cash flow and profitability in bankruptcy court.

Just won’t happen.

Let’s start with profitability. Whatever it is that you are selling, you have to be selling it for a/ more than what it costs to make and b/ more than what your overhead is. In other words, you have to have a bottom line that is in the black.

If you don’t, then that’s the first thing to fix by some combination of:

raising your prices
lowering your costs
increasing your sales volume.

There are two major break points in your business model: the gross profit (your sales minus your costs of goods) and the net profit (the gross profit minus the overhead expenses.)

The gross profit has to be in the black, otherwise you’re not in business but running a charity. And your gross profit has to be enough to cover your overhead expenses to get you to a net profit that also has to be in the black.

So say you are profitable, but you find yourself in a negative cash flow situation from time to time. Let’s look at some possible reasons for this happening and what the fixes are:

You manufacture a product or provide a service that require costs that you have to cover before you get paid by your customers.
- This is the easiest fix of all. Get some financing from a bank or from investors. More on what all you need to get “investor ready” in next week’s blog post.

You have customers that are slow payers, so you’re making the sales, but the cash is slow in coming in.
- get deposits from your customers
- get serious about collections.

You have a seasonal business and most of your cash comes in all at once.
- set aside a reserve account to carry you over the dry months.
- defer expenses and capital expenditures into months more flush with cash.

You show a profit on paper, on your Profit & Loss, but you’re making lease payments on equipment or financing a line of credit.
- this is a marketing fix…you just have to get more sales volume, either more customers or sell more to the customers you have.

When it comes to maintaining a sustainable business, there are two things you need to have in place: profitability and cash flow.

When you’re wanting to increase your profits and balance out your cash flow, I can help you get there. It’s just a question of honing in on the particular area specific to your situation and applying the appropriate remedy.

Would love to hear about your current challenges in the comments below.

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Bootstrapping your business? Wanna know how to borrow money for free?

May 17, 2017 by Monique Lusse Leave a Comment

Are you bootstrapping your business?

Most of us are. For example, a client of mine is carrying about $10,000 of credit card debt and making the minimum payments every month. This is costing her around $1,200 a year in interest.

Expensive rent on borrowed money.

Here’s how I advised her to drop that to $0.00 per year.

Yes, zero.

Free money.

Transfer the balance to another credit card offering 0% interest for 15 to 21 months, no balance transfer fee, and no annual fee.

There are only two out there that I could find that offer that. They are Barclaycard Ring™ and Chase Slate®.

Then there are all the other offers, but telling them apart and figuring out which is the best is a bit tricky. How can you tell which is the best option when there are different variables, such as transfer fees (3%-5%), billing cycles at 0% interest (15-21 months) and interest rates once the 0% interest is over (11.74%-24.49%)? By figuring out what the effective annual percentage rate, APR, is for each of these offers, that’s how.

Here’s a matrix I threw together to show you which is the best deal. All you’ve got to do is google the name to get to an online application.

The top two are the best, the next two are also really good; the rest are representative of the usual offers of 3%-5% balance transfer rates:

	Balance Transfer Fee Rate	Billing Cycles	APR
Barclaycard Ring™	0%	15	0%
Chase Slate®	0%	15	0%
BankAmericard®	3%	18	2%
Discover it®	3%	18	2%
Citi® Double Cash Card	3%	18	2%
Citi® Diamond Preferred®	5%	21	3%
Citi Simplicity®	5%	21	3%
Chase Freedom®	5%	15	4%
Chase Freedom Unlimited	5%	15	4%

What I didn’t include as a variable in choosing a card is the interest rate that each card charges after the 0% APR period is over. That’s because either you will have paid it off, or whatever balance you have left over can be transferred to another card.

Like this strategy? Dislike it? Leave me a comment below. Would love to hear from you.

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Why Hiring a CFO is Good for Business

March 3, 2015 by Monique Lusse Leave a Comment

cash_is_king

I talk to a lot of entrepreneurs about their financial systems and structures.

By the time they finally approach me they usually feel desperate for help.

Sometimes they’re not able to get a bank loan or line of credit because their financial statements aren’t up to snuff.

Or they feel stretched too thin and overwhelmed, and they aren’t even sure their bookkeepers are giving them correct statements and financial reports.
Or, they’re simply exhausted. They’ve stayed up late and worked more weekends than they care to admit, trying to learn QuickBooks; they feel like failures.

Do these situations ring a bell?

First, I want to assure you that you are not alone. And second, it doesn’t have to be this hard.

I’m a Virtual CFO, and I serve people just like you—smart, savvy business owners who are experts in their fields, yet they need support with their accounting and financial systems.

What is a virtual CFO? A virtual CFO, Chief Financial Officer, provides professional accounting and finance assistance to growing businesses that require a high level of expertise, but don’t yet have the growth or revenue to bring that role in-house. How does it work? I offer either an on-going partnership relationship or specific project-based assistance and support. I meet many of my clients via telephone, Skype, or on GoToMeeting; however, my local clients and meet in person, depending on their needs and locations.

The beauty of working with a virtual CFO is that you can work as much or as little with them as you’re needs and budget dictate. What kinds of things does a virtual CFO do?
My business is unique. I don’t offer cookie-cutter solutions to my clients. I understand that each business and business owner has individualized needs.

My services include, but aren’t limited to:
• Oversight of your bookkeeper ensuring you get accurate, timely and complete information
• Vetting and hiring your bookkeeper (if needed)
• Close collaboration with your CPA
• Vetting and hiring of your CPA (if needed)
• Ensuring you fully understand everything your CPA tells you
• Preparation of cash flow projections
• Working and problem-solving with your bank
• Determining pricing structures
• Reading, understanding, interpreting your financial statement
What can you accomplish with all this support?
Your Virtual CFO is your trusted ally. With her support, you can finally focus on your genius work—the work you love doing and feel called to do. You will be happier, have more time, and get better results.
Rather than throwing your hands up in frustration over QuickBooks, you’ll have more time for client work, idea generation, content creation, and networking—the stuff that actually brings you more money. In other words, you will be working on your business, not your books.

Isn’t it time you delegate the tasks that don’t bring you joy, clients or income? Isn’t that why you got into business in the first place?

If you have questions about how I work and the results I deliver to my one-on-one, private clients, please click here to set up time for a Financial Clarity Call. The call is free, and there’s no obligation.

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How I Got Out of Debt

July 21, 2012 by Monique Lusse 3 Comments

When I first began healing from 15 years of debt, I despised the word “patience.”

The fact that it comes from the Latin pati, meaning “to suffer,” didn’t help. But here’s the thing: that same root gives us “passion,” which in addition to its erotic conotations, means “boundless enthusiasm.”

When I learned that, I looked at “patience” in a different way. It wasn’t about “suffering in silence” or “resignation.” It was about deciding to face what needs to be faced with excitement and desire for change.

Now this wasn’t a “New Year’s Resolution” kind of thing, where I let myself off the hook around February 5^th because it was just too damned hard. This was a “I don’t know how I’m going to do it and I have no clue as to how long it’s gonna take, but I’m going to get out of debt.”

And I can’t really explain what made that difference. Call it “grace” or “hitting bottom” or just being plain sick and tired of living on the edge. I think you know what I’m talking about: there’s a different feeling in your body when you commit to a decision. It’s complete and irrevocable. Deepak Chopra, in his “Creating Affluence: The A-to-Z Steps To A Richer Life,” talks about the power of decision as the cutting off all other possibilities so that you’re left with a single focus not countermanded by anything. At first I thought he was a bit radical. But now I see that it really is a “no turning back” kind of thing.

And while he also talks about how healing can happen “with the flick of an intention,” sometimes there’s a lag time between the inward decision and the outward manifestation. And here’s where patience comes in.

It took years between the decision to be debt free and the actuality of it. To get out from under tens of thousands of dollars of credit card debt I got help from the San Francisco chapter of Consumer Credit Counselors. They advocated for me and got the banks to stop their collection calls, suspend interest charges, and to agree to a workable payment plan. My job was to work the plan. Which I did. And it took over two years of slow, steady monthly payments.

Looking back on it now, all these 30-something years later, I realized that the healing did happen in the “flick of an intention.” As soon as I made the decision, I was operating from where I wanted to be, not from where I was. And yes, it took a few years to clean up the consequences of all those past decisions. But it all started with “boundless enthusiasm.”

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