One of the real turning points in my career was the 10 years I served as the Chief Financial Officer of an international franchise company. I didn't realize how unique and rewarding that experience at a franchisor would be until I looked back on it years later.
The good fortune came in two areas.
First was being forced to confront a cash crisis… and figure out how to solve it.
Second was learning the incredible challenge that franchisees and small business owners face every day in their business… and how to provide them the education and tools to help them successfully navigate the unique financial and management challenges they face.
A Cash Crisis Right Out of the Gate
Like many lessons in life and in business, sometimes it takes a freight train barreling down on you before you recognize you have a problem… and more importantly… it forces you to learn how to solve it.
My first CFO position after leaving public accounting was a nice little company that had just completed a management buyout. Well, after about three months I realized that nice little company had one really nasty cash flow problem.
And by cash flow problem I mean we could not pay all our bills. Vendors were starting to raise hell wanting their invoices paid. The primary lender was banging on our door demanding to know how we were going to make payments on the money we had borrowed.
I was sweating bullets every two weeks trying to figure out how we would make payroll.
And I will never forget that nagging question that would wake me up in the middle of the night.
Is this problem going to get worse? Are we going to make it through this cash flow crunch or are we going to lose everything.
In hindsight, it was that cash crisis that forced me to simplify cash flow. To simplify how I managed the cash flow and how I communicated information about cash flow to the CEO and to our bankers and lenders.
It forced me to focus on fully understanding what's going on with the cash (which goes much deeper than just understanding financial statements). And always having a view of what's about to happen to the cash.
That experience was priceless and has paid huge dividends for me financially. It's also helped make my career more like fun than work. J
Helping Franchisees Understand Their Cash Flow
The second fascinating experience was becoming intimately familiar with the day-to-day challenge that franchisees face in managing cash flow (and the financial side of their business in general).
The franchisor had over 350 franchisees running small businesses across the US and Canada. I saw firsthand how franchisees struggled to understand and manage their cash flow.
It seemed to frustrate them. It seemed to scare them.
It made running their business even harder because their cash flow always seemed like such a mystery.
And the fascinating thing is that many any of those franchisees had a background in corporate America where they had a wealth of experience managing profit and loss statements and budgets.
But they still struggled to understand and manage the cash flow of their small business.
That's when I realized that understanding cash flow is not about a person's business experience or whether they are smart. The problem is no one was helping them simplify the process.
CPAs were plopping financial statements on franchisees and just leaving them to figure out how to understand what happened to the cash.
That is what ultimately led to the creation of the Peace of Mind schedule.
And to the radically simplified view of cash flow in the Cash Flow Focus Report.
I got lucky to learn the lessons of cash flow very early in my career!
Click here to get my blog posts delivered right to your email inbox. I publish one new post each week.