About this video
A friend had $1M in the bank and was back on his line of credit by Q4. Jay on why owning financial health means seeing it coming.
Transcript
Jay Dotson: I had a friend lean over to me as we were preparing to sit through a workshop similar to this, and he said, "Jay, I'm ready to talk again." And I said, "Okay, what's going on?"
Jay Dotson: He said, "Well, I'm trying to get my controller down from a four-week close to a two-week close so that we can get our numbers faster and make better decisions. But she's telling me it's impossible." And we both laughed 'cause it's not really a good answer when your boss is asking you for a performance improvement, right?
Jay Dotson: But that was really just the beginning, because he would go on to say, "Jay, this time last year, we had over a million dollars sitting in the bank, and so we felt great. We had a lot of money saved away for a rainy day. But because of one bad quarter early in the year, we didn't have any insight to where things were heading. We didn't have any financial forecasting."
Jay Dotson: One bad quarter and we didn't even know that we're gonna lose money on the year by Q4. "And to make matters worse, Jay, we just had another $300,000 come due and that million dollars is gone. We're back on the line of credit, and I'm kicking myself because I should've seen this coming."
Jay Dotson: Now, before you cast your judgment on this incredible leader, he's one of the best operators I know. He grew his company from four million to 30 million in less than four years. His clients love him. His employees love him. They see how different he's doing business, and they wanna be a part of it.
Jay Dotson: But it crushes me to sit across from him and him to tell me that, because I wonder how much of this could've been avoidable. Could it have been predicted that this happened, right? That you would have been able to see with one bad quarter, where does this lead us? How much is this gonna eat into our cash balance, where we're going to have to now start leaning into that rather than our current operations to fund what we wanna do in the future? This story is not a one-off case.
Jay Dotson: This is what happens when financial leadership is missing from the equation, and so I wanna talk to you about that. 'Cause in this case, he had three or four people on his accounting and finance team, and payroll was being run, vendors were being paid, collections were coming in, although slower than anticipated. You'd wonder, all the boxes being ticked, was this a success or failure? And if he didn't make changes quick, it was gonna end up in a bad situation.
Jay Dotson: So your number one job for owning financial health is this: it is imperative to keep profit and cash from slipping as you scale.
