How To Reclaim Your Cash Flow

7 Steps Guaranteed to Get and Keep Your Business Out of Debt

A major source of stress is the money you owe to other people. As your business grows and your overhead expands, you become more leveraged. Financial freedom creeps further away with each employee you hire and every asset you buy.

Debt Free Business

Sound familiar?

Most business owners believe that leveraging debt is the only way to grow. I am here to tell you there is a different way.

How would it change your outlook on business if you didn’t owe a dime to anyone? How would it affect your stress level if you didn’t have any payments to make?

Imagine the freedom you would have if 100% of profits went to building a stronger future for your business and your family.

I am here to tell you that you can operate your business completely debt free by following 7 straight forward steps. No fancy accounting and no working the system. You can make it happen, and a lot faster than you may think.

To help you along the way, I have created a free blueprint that will help you prioritize and pay off your bad debts. It will keep you on track and keep you motivated to succeed! Download it right here then read on.

Here’s My Story

At the end of 2009, my construction company had a record year of sales. I had every reason to believe that 2010 would be even bigger, but things turned out different. In December of ‘09, we lost out largest customer and things went downhill. My payroll was substantial and we were barely getting by.

Slow times continued and all along we were getting deeper and deeper in debt. I knew that any day we could get that “big project” and be okay again, but it didn’t come.

We were behind on bills and one morning I walked into an IRS agent sitting in my office. I was over $100k behind on payroll taxes and she was there to collect. That moment was intense and I was scared that I was about to lose everything.

In that moment I knew that something had to change. I had to fix the mess I had made. I prayed about it and realized that I had to learn a new way of doing business. I vowed that I would never be in that position again. The only way to be confident it would never happen again was to not owe anybody. I had to stop borrowing money and to get out of debt. I drove a stake in the ground that day and never looked back.

Here’s How I Did it and How You Can Do it Too:

1 – Create a Budget

Stop the bleeding. Reduce expenses to an amount that you can handle with your current cash flow. It’s not easy, but pull up your sleeves and figure out how to do it.

2 – Get Cash Flow Positive

For me, this meant I could not afford to use company money to pay for any project. To do this, I began to require deposits from all customers. I would deposit the cash into an escrow account that was used for their project only. No more robbing Peter to pay Paul.

I decided that if a customer would not give a deposit, I would not take the job. This was easy for me because I was out of cash to invest in jobs!

While it was easy, it was also terrifying. At times we thought we would lose customers with the new requirements. The fear was unfounded though. In 8 years, we never lost one.

This may look different for your business. The bottom line is that you can not be so afraid of losing business that you don’t take the steps you need to. Figure out what it means to run a positive cash flow, and make it happen at all costs!

3 – Save

Use your positive cash flow and reduced expenses to build a savings account. Decide how much of your profit you want to commit to savings. At the end of each month, deposit that amount into a business savings account.

I decided to put 1/3rd of all profits toward my savings account. My first savings goal was 2 weeks of overhead expenses.

4 – Bad Debt Snowball

Begin paying off bad debts. Start with suppliers, vendors, government (taxes) and any past due payments.

I started with my suppliers first so I could keep a good working relationship and keep materials to do the jobs. I paid them based upon highest interest rates. As I would pay one off, I’d take the amount I was paying toward that debt and apply it to the next one and so on.

To help you out with this step, I have put together a Debt Snowball Blueprint . It will guide you through exactly how to lay out your debts and get them paid off fast.

5 – Save 2-3 Months of Overhead Expenses

This is your emergency fund. Don’t start this until your step 4 debts are paid off. Once they are, use the amount you were paying toward debt to build a savings account that can sustain several months of operations.

It was important that I could sustain the slow times without borrowing money. A typical seasonal slow stretch for my industry is 2-3 months so that was my target.

6 – Asset Debt Snowball

You have paid off your bad debt and built an emergency fund. Now it is time to pay off your assets.

When I decided to get out of debt, I meant completely. Once I had an emergency fund that would pay my overhead through the slow times, I began to chisel out what I call asset debt. These are things that would have value and become mine once they were paid off. Vehicles, equipment, mortgage, etc fit into this category.

7 – Diverge

Once all debt is paid off, put 50% of profits toward your general operating account. Put the other 50% towards a savings account.

Be sure to earmark the appropriate amount for taxes. Typically, 30% will cover you. This way you’re never caught off guard with having to pay a tax bill you’re not ready for.

To Sum it All Up

The steps are simple. The process can be can be long and weary, but it is absolutely worth it!

Here is some perspective for you. I was in business for 15 years, doing things the wrong way and ended up in massive debt. It took me only 4-1/2 years to get my business completely debt free. That includes property and a fleet of vehicles.

You can do it too. You’ve just got to want it bad enough. You’ve got to get focused, follow this plan, and don’t quit!

And to help you get started, I have put together a free blueprint that will lay out and prioritize your debts. It will guide you through exactly how to pay them off fast! Plus, I am giving away a free, one-on-one, coaching calls with this week’s freebie. Download the blueprint to put your name in the hat. You don’t want to miss out!

Debt Snowball Blueprint

I know the idea of running a business without using debt seems a little far fetched. You have heard over and over that the way to build wealth is to leverage other people’s money. The problem is that this works our great… until it doesn’t. Then you are left with crushing obligations that suck the life from you.

Gaining financial freedom in your business is the absolute best way to ensure long-term success. I challenge you to go for it! You will not regret it.

One more note on this one… I’d love to hear from you. If you think this journey is one you would like to take, drop me a line at dbranch@davidbranch.net and let me know. Let me know where you are right now and where you would like to be. I’ll personally read your responses and help you out with some more resources and encouragement.