Solve Your Cash Fow

Solve Your Cash-Flow Problem to Stay in Business

Bad financial management can be hard to overcome. Adopting an airtight plan to control costs now is the first step to recovery

Problem: The Cash Cow Is Dead

Hot & Cold Inc., a plumbing and heating supply company in the heart of Virginia's Shenandoah Valley, is headed for the slaughterhouse. As the housing boom grew, so did sales, from $7 million a year to $14 million over four years. But as the company expanded, its problems multiplied, and no amount of sales could cover the warts. As the economy faltered and poor management continued, revenue started dropping by more than $2 million a year. There were no easy sales to be milked that would carry the company through to the next quarter. Instead, it has been leaking hundreds of thousands in profits and cash.

Crunching the numbers over the past five years shows lost opportunity and bad financial management have cost the company about $5 million in profits. Overtime alone is about $250,000 a year. Today Hot & Cold is at $6 million in sales and is running at a loss in excess of $1 million. The bank is nervous, and ready to pull the plug on its line of credit. The steady supply of new business has dried up, and the three owners' lives are on the line. The old cash cow is chopped meat.

To keep the company alive, they've mortgaged their homes, maxed out their credit cards at usurious interest rates, and cashed in their 401(k)s. With college-age kids and wives with expensive taste, money issues are creating serious tension on the home front, and the desperation and panic that the owners are feeling is transferring to their employees. Worker morale is low, and employees are phoning it in because they are convinced they'll be out of a job tomorrow. As a result, the few remaining clients are unhappy, and threatening to take their business elsewhere.

1. Match the words or expressions ( column A) with their synonyms in the text (column B)

A B

Real estate expansion maxed out = have reached a maximum

A sum is transferring = is being conveyed

was unstable opportunity

Profits amount = a sum

Plummeting desperation = extreme anxiety

A Prospect threatening

Edgy revenue = profits

Balanced faltered

Have reached a maximum dropping = menacing

Is being conveyed steady = balanced

Spirits morale = spirits

Menacing the housing boom

Extreme anxiety nervous = edgy

2. Explain:

“As the housing boom grew, so did sales”

“is headed for the slaughterhouse”

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