March 16, 2015

Plan, plan and plan


A few years ago, we got a letter from the bank telling us not to spend any more money until we’d brought our account back in line with our banking facility. For the avoidance of doubt, that’s not good.

It took about five milliseconds to realise that the financial controls we’d had in place for years were no longer fit for purpose and we’d have to kick our management systems into a higher gear.

That’s not exactly how I put it in the moment. I only used two words, one of them quite colourful.

It’s times like these you realise how much you don’t know.

Our reporting systems, designed for the cycle of monthly Board meetings, were no longer fit for purpose. Our weekly cash-flow, more of a guesstimate than a microscope, was woefully misleading. We needed accurate insight if we were to make payroll and keep our heads out of the depths.

So that’s what we did.

One spreadsheet – no estimates.

Take it to the bank

We pulled every creditor and debtor out of our exotic accounting system, plotted them onto a simple spreadsheet organised by the day and week that the money would either enter or leave our account. We added payroll, overhead, taxes, everything.

We took our plan to the bank, literally.

And then every single day for the next six weeks we managed the plan, planned again and managed that plan. We rang every creditor to tell them when they’d get paid, we called every debtor to chase our cash. We updated our plan in real-time for every cash movement.

We followed through on every commitment, kept the bank on board, and managed our way out of the hole.

Work the problem

That’s as close to the wire as I’ve ever been.

My take-away: the more critical the situation, the more knowledge, understanding and control you need to stay clear of the precipice.

Another way of putting it: the only way to even attempt control is with as close to perfect information as possible. Stare the demons in the face, be afraid of nothing, ask every question, write down every answer, stay nimble and work the problem.

Plan, plan and plan

The unknown is always scary – can we make it?

A plan always helps – we can do it this way.

Some problems are insoluble but there’s almost always a route through. Work out what you know, find the corners and edges of the unknowns, fill in the blanks, unearth the dragons.

The simple act of writing things down gives you clarity. What was once scary becomes a problem to solve – and that’s a much better feeling if you ever have to pick up the phone to the bank.

Skippy Strategy: The next time you feel out of control, write down where you are now, where you need to get to, and your best guess about how to get there. You know, plan. Chances are you’ll not only feel more in control, you’ll actually be in control.