Positive Cash Flow
I do this exercise where I force myself to write down my next milestone 20 times a day, everyday, until I hit it. Positive cash flow is the next major milestone, and arguably the only one that matters for my company this year.
It is a simple concept really — there should be more money in the bank at the end of the month than there was at the beginning of the month, every month.
If cash is oxygen then my business is suffocating. I do have a small financial safety net knowing my brother will pull me out of a bad spot. But the pressure is seriously on right now.
I want to define a timeline for this milestone. A milestone can’t be perpetually out of reach (i.e. positive cash flow forever!). It has to be tangible. You could say that just one month of positive cash flow is a milestone in and of itself. The problem is that one awful month of negative cash can wipe out several positive months. Just one month in the positive could be an anomaly instead of a milestone.
It has to be more. So I’m setting the milestone at 3 consecutive months of positive cash flow.
The good news is that this month is likely to be my first month. The other good news is that I just had my best week of sales yet. In fact, I didn’t just beat my previous record, I destroyed it!
I’m beginning to understand my own personal capacity. I can juggle deliveries around a bit since laundry is rarely urgent. Most people don’t mind waiting an extra day to get their clothes.
That’s important because without that caveat I would not be able to handle the amount of business I got last week consistently every week. Being able to reschedule deliveries increases my capacity. Now I know I can handle up to $6k a month or more by myself.
The other thing not evident in the graph is how much of the laundry I had to outsource. Even though sales are up, my margin is being obliterated because I’m doing very little of the laundry myself as opposed to last year where I was doing most of it myself. The margin effects the cash flow.
I want to take a moment and distinguish the difference between positive cash flow and profitability. For this business to be profitable I need to be able to afford to hire someone to do the work that I’m doing now. I’ve got myself on a salary of only $12k this year. That’s not going to fly for a full time employee. Paying myself so little allows me to grow the cash in the bank.
Of course, I’m still not there. It’s still questionable whether or not this month will have positive cash flow. I need to finish strong this last week of January.
This story is part of a series documenting the journey of a Dallas startup called Feather Laundry. For your reference here is the Table of Contents for the series.
Previous Story:
Next Story:
