Hey guys, I'm Angeline from Peer Business
Consulting and this is #AskMeOnMonday.
So this week I wanted to do
something a little bit different from
previous videos. Instead of answering
a question from a business owner, I
wanted to talk to you guys about a
personal challenge that I've recently
been facing and talk to you
about my realizations and
lessons that I've learned from this
challenge and how I'm dealing
with it and handling it going forward.
Now I know that I have some clients who
have actually been through this before.
And if this applies to you
as well then I hope this video resonates
for you. And if it does that you can pick
up some tips along the way. And if
nothing else, just for you to know that
you're not alone in your struggles as a
business owner and that all of us face
struggles from time to time. So let's get
into it.
For those of you who know me well,
you'll probably have noticed that I've
been fairly stressed lately.
I've had a fair bit on - I've got
a bunch of clients that I'm trying to
manage, I've got a bunch of new
products that I'm launching, as
well as the normal commitments that most
of us have, including family,
friends, health and fitness,
sleep - all those things. But when I really
sat down to think about where my stress
was coming from, I realized that actually
being busy wasn't the issue. In fact
busyness tends to motivate me and it's
actually something I normally thrive on.
What it is, is worry over my cash flow
situation. Now I'm sure a lot of you have
just heard that and gone "Aha! Ange, I hear
you!" Because it's such a
typical business problem that
many of us face, particularly in your
first few years of business, which I am
in. So yes we are talking about that
dreaded issue of lumpy cash flows, which
is exactly what I'm going through right
now. I suppose for me it's a little
bit of a shock to the system.
Number one because I'm a coach and I
talk about you know so many ways to
avoid this very situation, so I guess I
should know better. But number two
because I came from a corporate
background so I've always had - I've been
lucky enough to have - fairly
high paying jobs. Money has
never really been an issue. So
this is actually the first time in my
life I am facing
financial pressures. So I'm actually
going to drill down for you what the
last two and a half, two and
three-quarter years have looked like for
me in my business. So I am laying it all
on the line and I'm being completely
transparent to you. So here is what my
cash flows year-by-year looked like for
the last two and three-quarter years.
You can see from the chart that my year
1 revenues were pretty low, but I
wasn't worried at that stage because
I knew I was starting up a new
business so I had a bunch of savings
that I was going to use as my
startup capital. And I didn't
have an expectation that I'd be earning
much in the first year, simply because no
business ever does really. So that was
the first year. Now the second year I had
a bumper year. You can see I'm
almost $150 k in sales revenue
and that was a fantastic year.
My name was getting out there, I had a
massive increase in new
clients. I had a few clients
that were giving me a lot of repeat
business, which was fantastic. I
had a lot of activity happening - I was
writing blogs, I was networking. Great
year. And then year 3 came along.
Basically I began the year with a
family holiday and the holiday
was fairly challenging for various
reasons. I get as a result of that I
came back and I went into a little bit
of a depression. And nothing I
did could snap me out of
that feeling of depression, so I'd lost
motivation to do much work with the
business, I wasn't really networking
much. The clients that I'd been
servicing had a little bit of a low
period as well but generally I wasn't
really looking for the work. So as a
result, the first half of 2016/2017
wasn't great and didn't look good for me
revenue wise. So then 2017 calendar year
began and I was lucky enough to have
another holiday - this time in Mexico - and
this was a happy holiday. I had a wonderful
time, and I got back with a new lease of
life, the depression had seemed to pass,
and I was really excited to finish 2017
financial year with a bang. However
this was a case of the
external market having an
adverse effect on my business and what
happened was that my two biggest clients that
I had relied on for work we're having a
fairly slow year themselves so as a
result of this over-reliance I guess I
was in a pretty bad predicament.
So this has basically now forced to me to
sit down and really look at
what went wrong, what should I have done
to avoid the situation and what lessons
have I learned as a result of this
situation. I worked out that there are
two main reasons why this has all
happened -1) is that I've almost
depleted my savings buffer and
2) is that I'm relying at the moment (or
I have been relying) on one or two
clients for almost 90% percent of my
revenues. So how to fix this going
forward and prevent it from happening
again? So the first thing is to "make hay
while the sun shines". Now i know that's a
cliche but what I mean by it is this
idea of a savings buffer. I advocate
this to all startups that I advise
that you need to have access to funds in
case of economic or financial downturn.
This basically means some savings,
or some borrowings or maybe even friends
and relatives that you can draw money
from if need be. Now it should be
available fairly quickly when and if you
need it, and it should be for a fairly
lengthy period of time. I had this
but because I was not
earning enough income for almost nine
months I guess what had happened is the
buffer wasn't enough to sustain me
over this whole period so where I've
made my mistake in this last year has
been that number one I probably got a
little bit too cocky in year 2 and
didn't put aside enough savings in
that year when i was having a
good year. And the second
thing was that I didn't I guess envisage
that I would have nine months of
hardship. This was probably a
lot longer than I expected so
what I'd say there is assume
the worst and make sure that you have a
few options in regards
to funds that you can draw on.
The second
way to prevent this from happening again
is to ensure that you have diversified
your income sources. In my case
I've been relying on one or two
clients for most of my income.
There's actually three ways you can
diversify income. 1) is to diversify
your clients, so that means have
a number of clients
on which you can rely for income
not just one or two like I was.
The second way is to diversify your
products and services so what that
means is to have a range of different
types of products and different types of
services that if one particular product
or service isn't selling at a particular
time due to whatever factors you can
rely on the others to still bring in
income for you. And the third way to
diversify is to have a
variety of both active and passive
income sources. Passive income
is income that's coming in that doesn't
require any extra time or resource
effort from yourself or your staff.
I'm sure that I will come out of my cashflow funk
very soon. I've got a range of
products I'm looking to launch which
will go a long way to increasing my
passive income. I'm also reviewing my
product and service offering in general
to make sure that I'm spending
time and effort in the areas that have
the highest earning potential. And also
I'm heightening my sales and
marketing efforts so as to win new
business and reduce reliance on my top
two clients. So lots happening.
I do hope that today's video has been useful for
you and you've had a bit of a
look into my personal situation.
And I guess it tells you that even business
consultants don't always get it
right for themselves and
we all struggle. But the key is not
to let it get you down - at least for too
long! - review what's happened, try
and assess where the issues are,
make a plan and then stick to the plan.
That's #AskMeOnMonday for this week.
As usual if you liked the video please
hit Like below, Share it with your
networks and don't forget to Subscribe
to my YouTube channel so that you don't
miss out on future videos. Thank you so
much for watching. I will see you next Monday!
Cheers guys.
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