Using a Cash Gap Plan in a Service Company in 2022

Cash Gap Plan

A Cash Gap Plan In A Service Company

This week I’m writing about using a Cash Gap Plan in an service company. A Cash Gap plan will help you to quickly collect your outstanding receivables, get your customers to pay faster, and negotiate better terms with your vendors to improve your cash. I have been writing about some of my hero clients and how we are able to achieve significant results from our work together. We have 36 Coaching Modules, which are areas within your business that when we improve your performance in these areas, your business will run better.

Robert’s Service Company Challenges

Robert is this week’s small business hero. He owns an service business that has been in business for over 50 years. When I met Robert he was interested in selling his business. Although he had been successful in growing his business, it was having financial problems. To make things worse a very large customer had defaulted on a payment of nearly $200,000. This event had him thinking about filing bankruptcy. He was working very long hours and was constantly interrupted by customers and employees. This was affecting his health and personal relationships with his family, in particular, his wife. He was spending very little time with them.

Solutions for Service Company: Strategic Plan, Team Deployment, Tactical Marketing, Lean Program

We decided to implement several of our Coaching Modules to address his situation. These included a Strategic Plan, Team deployment meetings, Tactical Marketing Plan, but most importantly a Cash Gap Plan, Time Management Plan, and a Lean Program.

A Cash Gap Plan for Robert’s Business

A Cash Gap Plan is all about carefully monitoring your plan to improve collections, lengthening your payments with vendors, increasing your prices aggressively as possible, and eliminating operational efficiencies. In all things in life, we tend to get what we focus on. During our coaching sessions, we focused on his cash flow.

Time Management for Robbie’s HVAC Company

We developed his Strategic Plan and held team deployment meetings. Additionally, we discovered a serious time management problem. Employees and managers were constantly interrupting one another during the day. This wasn’t causing chaos and stress in the business. We began to track interruptions and developed policies and strategies to reduce distractions. We also implemented team meetings in the business.

Results for Robert’s service Company

As a result of these strategies, his results were immediate and dramatic. Here’s what Robert said:

Alan first worked with me one-on-one, then met with me and my managers, and finally with all of the employees. Our cash flow has started to improve and continues to improve daily. After six months our profits had increased over $152,000, which annualized is over $300,000 per year! We have started paying off our accounts payable to our vendors. We have reorganized our office and improved our staff with Mr. Melton’s help. We are starting to achieve many of the actions in our action plan. I have a clearer vision of where we are going and what it takes to get us to the next level. With this clearer vision comes renewed hope. Most importantly, I am working less and have started taking my wife out on dates. I would like to thank Alan for seeing hope in me and my company, and helping us through this difficult time.

 

Congratulations Robert for your remarkable success in using a Cash Gap Plan and other strategies to improve your company! You are one of my business heroes and an inspiration to other business owners. You can view another case study using a Team Building System in a landscaping company here.

 

small business coach

Where is Your Business on the 7 Stages to Freedom?

The 7 Stages to Business Freedom

Nearly every day as I talk with business owners I will describe the 7 Stages to Freedom and ask them, “Where is your business on the 7 Stages to Freedom?” I have rarely heard a business owner say that their business is in the freedom stage. Take a look at the chart below:

Dream Phase.

Business owners in this stage are sick and tired of working for someone else. They are researching the market to determine a need for their product or service. They are creating a business model and looking for investment capital from banks or investors. There are in love with their idea!

1. Start Up Stage.

Business owners in this stage take the leap of faith and launch the business! They develop a plan. They talk constantly with whoever will listen about their differentiation. They are focused on all different kinds of marketing; developing a website, social media, networking groups.

2. Chaos Stage.

If a business owner is successful they descend into the Chaos Stage. This stage is characterized by disorder, red ink, and stress. Business owners are investing cash, time and energy. They are growing in sales. And usually, they are growing the team.

3. Break Even Stage.

From here a successful business owner will climb into the Break Even Stage. In this stage, the business owner is beginning to measure their results. They are providing incentives to their team and to Strategic Partners to join them. Finally, they are expanding their markets.

4. Burnout Stage.

In this stage the excitement has worn off. Too many hours, too many headaches, too many missed family events and too little pay have taken their toll on the stressed out business owner. Many business owners hire a business coach or quit in this stage. The key to moving forward is to fall in love with their business again. They need to renew their vision. If they do move forward they advance into Stage 5.

5. Profitability Stage.

Business owners in the Profitability Stage are making money but are usually working too many hours. They frequently feel “owned” by the business. To get to the next level they need to economize or to maximize their profitability. This can be done by implementing a lean program. They need to systematize, which includes documenting all key processes and making process improvements. Finally, they specialize, which may mean narrowing the scope of services to the ones that are most profitable and most scalable.

6. Success Stage.

When business owners reach this stage they are well known for their excellent products or services. They are making really good money. But they are still stressed and working too many hours. They are too involved in the day-to-day operations, and not involved enough in the business strategy. What most lack in this stage is delegation; “no one can do it as well as me.” They key here is leadership development. They need to delegate operational tasks to advancing leaders.

7. Freedom Stage.

When business owners arrive in the Freedom Stage, they could leave their business for 6 months. When they return the business would be performing better than it was when they left! In the Freedom Stage, a business owner can expand into new locations or start a non-profit. They can acquire another business. Or they can simply harvest the extra profits and enjoy a fulfilling life.

Summary

So I’ll ask you the same question that I ask other business owners. “Where is your business on the 7 Stages to Freedom?” If you are ready to go to the next level in your business, give us a call. We’ll explore that possibility with you, no charge. Since we’re talking about growing your business, here’s an article on 10 Ways to Grow Yourself So You Can Grow Your Business. 

Tell us where your business is on the 7 Stages to Freedom in the comments section below.

 

small business coach