Sounds like a fun post, right? It has been incredibly hard to predict what our monthly cash flow would be like since opening in 2005. And honestly, did I even think for a minute about the idea of cash flow before we opened doors to our own Theater space? — Not. At. All. I was thrilled about income and just made sure that expenses for DSI, with no FIXED overhead at the time, were less than our income. SIMPLE.
You know what’s not simple? Standard Inventory (Beer, Shirts, Snacks, etc), Quarterly Sales & Use Taxes, Rent, Utilities, Employees, Liability Insurance for the space, Advertising and Professional Membership Fees, Lawyers and Accountants, A Business Privilege License (OH YAY! A nominal but extra Fee just for the right to rent otherwise unoccupied commercial space, employ Tax-paying citizens and do business in town), Health Insurance, Retirement, and The overly complicated idea of Basis.
Yeah, I know. Now take those mostly FIXED costs and consider the anxiety of operating a service-based for-profit Arts organization with an extremely short sales cycle for all its revenue streams. AHHHH!
My company doesn’t necessarily have cash flow problems right now. I mean, any business could always use some extra cash and I’ve had plenty in the past (READ: cash flow issues, Not cash): I’ve not paid myself for months on multiple occasions; I’ve applied for personal loans to cover debts the company took on during periods of what we can call “Less-than-perfect” accounting; I regularly robbed Peter to pay Paul when deadlines hit (and I somehow managed to keep all the sharks happy).
But as I was more focused on survival and constant money allocation to cover our bases as a company, when I HAVE had extra money in the business — YAY! — it has been easy for me to justify spending it on things that were not always strategic for the FUTURE of the Theater. (Did I always pay down my business credit card first? No. Did I think about potential hidden costs? No. Has that been smart Leadership? No.) In the last two years I started to recognize that I had accidentally operated with a poverty mentality.
What does poverty mentality mean?
For ZW and DSI Theater Inc, I focused on what I did not have, not on what I did have. I did not always apply the positive belief that my comedy theater was worthy of success. I didn’t know how to frame what success meant. As a result, I was often jealous of organizations that were not exactly like my own, which drove spending and created unnecessary expenses that put my own financial health at risk.
I like to think I’ve reframed success and I’ve started to operate differently. Now to put my Cash Flow Woes post in perspective, that “reframe” helped me motivate and think strategically about cash flow but it doesn’t answer the list of questions ALL Arts Entrepreneurs have about managing cash flow (MUST REMEMBER TO KEEP A RESERVE) or, maybe even more importantly, How to create cash flow when necessary.
Look for that soon. Must work now. On cash flow.