Hi there and welcome to the Everyday Entrepreneur podcast where I, Caitlin Fritz help you reach your entrepreneurial potential. Together we can build your dream social impact business so that you can leave a legacy beyond your nine-to-five. Hello, hello, welcome to Everyday Entrepreneurship. My name is Caitlin Fritz, and I am so happy to have you here with me on this beautiful March afternoon here in the UK. If you're just joining in, Welcome, I just want to share a little bit about myself. I'm Caitlin. As you can tell, I'm originally from the US, but now currently in the UK. And I have been in your shoes as an ed tech tech for good entrepreneur myself, building up a business from paper prototype all the way to Forbes 30 under 30. And since the pandemic, I've supported over 650 founders, Across the world to build, grow and scale. their impact led ventures. Now you might've heard of the millionaire next door. We are talking about the entrepreneur next door. So everything we discuss on here is for you, practical, tried and true tips, as well as inspirational interviews with founders who's been there themselves. And today I want to share with you something that I know a lot of entrepreneurs. have struggled with. Uh, you can't see me, but I'm raising my hand included. And it's something I feel like as a community, we really need to talk about more. And that is money honey. We are talking about money, money, money, but not just about, you know, pricing, which, you know, we have an episode for that or business models, which. show notes, check out that episode as well. I want to talk about cash flow issues. So some of you might have felt the pinch. Some of you might be looking ahead a little bit nervous about your cash flows. So let's start with the foundations. So cash flows have nothing to do with your pricing or your costs, but really it is about the time it takes for money to go in and out of your business. I think that's like the easiest way I can explain it. It's do you have more money coming into your business than going out? What is the rate you are getting paid? And what is the timing of the payments that you have Sometimes it can feel a little bit like a Sudoku puzzle trying to figure all these things out. But I want to share with you a few tips and tricks to manage these cash flow stressors. Now, invoicing. If you are If my service based entrepreneurs or you work on an invoice system, this first tip is for you. Manage your invoice timeline. Most invoices over here are paid on a 28 day or 30 day cycle. So the moment I submit my invoice to Suzy, she has 30 days to pay. pay me. If she doesn't, then she's kind of violating the invoice. For example, some people can charge late fees, etc. But having very clear and standardized invoice timelines is really important because I know when I invoice Susie today in March, this time in April, I'm going I expect that money to actually hit my bank account. Invoicing, don't get me wrong, this is just a personal aside, can be kind of annoying because people can wait till the last day or there's hurdles and hiccups, especially if you're working with bigger clients, um, public sector clients where there's 400 different people to get an invoice approved. But if you can manage and standardize your invoice time, and I even recommend using an invoice software. Or some sort of tracking, as simple as an Excel sheet, when, when you submitted the invoice, when it should be paid, and an invoice reminder kind of timeline. This can keep you on the ball with getting paid on time. I use Crunch, which is an accounting software here in the UK, because I also file my returns with them, and they have a nice little invoice software. But like I mentioned, you can do this as simple as an Excel sheet. And Just as a interlude for invoicing, you can be annoying. So, for example, I usually send a reminder two or three days before the invoices due if I haven't heard anything. This is a business relationship. You provided value and you deserve compensation. So, tip number one for managing cash flow issues. Is invoice timelines and reminders. The second thing you should look into as a tip and trick is your payment schedules for your online payment processor. This is for both my digital product entrepreneurs service-based providers, or even physical product based innovators because Stripe, PayPal, all of these online processing. Payment processing systems have usually a standard payout period. Some of them you can kind of customize so you can get paid at the end of the month, two weeks after the transaction, etc. But you as an entrepreneur need to go in knowing what those timelines are. The worst thing you can do is have a pre sale, have a great launch, you're thinking this is going to cover some of those freelancers, some of those business bills, and then you are waiting a month. I would have this once again kind of like invoices standardized and be very clear and you should know what your payment times are. The third tip I recommend is kind of one I gathered from personal finance. So many of you probably have a personal finance budget for your household, for your family, You know how much money is coming into your household, what your bills are, your expenses are, et cetera. You should be doing the exact same thing for your business. And you should have that buffer, like you have an emergency fund or a rainy day fund in your personal account. in your business account. You need to have a buffer kind of savings reserve in your business bank account. Whether that is one to three months of business expenses, some people go all the way to six months. Awesome, if you can, um, but I know if you're starting out, you're quite lean, having between a month and three months will allow you to take those hits if, you know, your invoice is paid late, or if there is an unexpected expense, and you will sleep better. So much better at night. I know what it's like running a shoestring budget, and let me tell you, those were some of my sleepless nights, because what if there was a subscription that I totally forgot about, um, that's on an annual plan that jumped in that month. And trust me, that has happened to me. You want to have that safety net for yourself, for your peace of mind, but also for your sleep. business. Can't recommend it enough. Make some sacrifices so that you can have that safety net in your business. And last but not least, my fourth tip for you is to model your outflows and inflows. So kind of like an ocean, we can say there's high tide and low tide periods. And there's high tide and low tide periods in business, especially if you're working a more seasonal kind of route. For example, I was Mentoring someone in the events industry and wedding and events are a lot more popular in the summer than they are in the winter months. So if you can model from your past years sales, you know, your inflows as well as your outflows to project the next year, that is incredibly helpful. And if you're just starting out, being able to hypothesize. You know, if you have one, two, three clients in the pipeline, when will these clients convert? And when will that money come in and out of your bank account? And I think having this more long term outlook will give you a better strategy and oversight. in managing your business. It will take a little bit of legwork. You do not need to be an Excel genius. I'm telling you, this is something anyone who has basic Excel knowledge can do themselves. But by modeling your inflows and your outflows, once again, it will show you at the end of the year, what's your expected You know, revenue this year. What are your expected total expenses? This, I kind of, I find it really kind of exciting because you can look and be like, oh, okay, I'm on track to have a 30k year, a 50k year, a 100k year. whatever that number is for you. So just to recap, some of the biggest tips to understanding and managing cash flow issues include standardizing your invoice time, understanding your payment times on payment processing software, buffer your business bank account with an emergency fund, and model your outflows. and inflows. These are four of my top tips, but I'd love to hear from you. You know, what are some tips that you have that we can share with the greater everyday entrepreneurship community? How you manage cash flows, how you have modeled or managed these kind of tougher situations with the high and low tide of business. So once again, drop me a line, share with me what you have done If you want any additional tips and tricks, be sure to check out my Instagram at Caitlin Fritz, as well as my YouTube at Everyday Entrepreneurship to get more practical videos and insights to building and growing your dream biz. That's it for this week's episode. Thank you so much for listening. If you can, give me a like, a subscribe, a rating or a review because that means the absolute world to me. As a small business owner, you probably understand what it's like to get those feedback, those testimonials, and those stars of reviews. So, thank you for listening in. Until next time, this is Everyday Entrepreneurship. Thank you for joining me for this episode of Everyday Entrepreneurship. To stay tuned and most up-to-date, subscribe wherever you listen to podcasts. You can follow me Caitlin Fritz on Instagram. And if you have any questions about building your business with Impact, drop me an email with the link in the show notes.