To prime the pump on this “Dear Abbey” style ecopreneur coaching column, I’d like to start with some actual consulting projects, with enough changes to protect the client.

A few years ago I got a call from a cool green company that already had good sales, about $1 million a year. Problem was, their cash flow was “upside down” – they were trying to cover current expenses with money they wouldn’t get until later. They wanted me to help raise money to cover the gap.

At first, it seemed they were all set to receive some financing. I had a lender in mind who specialized in high-risk loans to green enterprises. All the lender needed to start the approval process was an up to date financial report. But as I started interviewing the principles, I learned that the company’s financial books were several months behind. Sadly, even weeks and months later, this situation persisted, making it impossible for the firm to make effective requests for money from anyone other than family members.

Two Lessons:

1. Keeping books doesn’t generate sales, so it’s so easy to just let it slide. It’s kind of like doing the dishes. You can’t escape from this task if you want to grow a business that complies with government laws and/or you may someday wish to seek outside investment capital from most types of investors and lenders. Not keeping your books up to date at least once a month is a false economy.

   The seemingly negative pressure caused by reorienting your business around keeping your books current can lead to many other positive improvements transformations in your company.

2. The next even tougher lesson is to reorient your business and sales model toward a “pay me first” approach. If this client had done this from the beginning, they would not have needed to raise a “bridge” investment.Out of the deep desire to make a sale (a.k.a., “desperation”), new entrepreneurs often give the buyer terms that make it very difficult to complete the work.

   Ecopreneurs bring something of especially high value to the world. It’s okay to ask for enough money up front to run your show efficiently. Losing a customer that isn’t willing to be a real partner in your success is really no loss at all.

In my own operations, I avoid any sale that could possibly result in the need to collect money later for work done now. Whenever I’ve broken that rule, I’ve ended up wasting countless unpaid hours trying to rectify the situation.

In short, drop desperation as a point of view and keep your cash flow right side up from your first sale onwards.

Email Mark Winstein

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