In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley shares hard-earned lessons from a cash flow crisis in January 2024, when his business couldn’t fund payroll. He explains how this pivotal moment led him to develop a “CEO dashboard” with three essential tools: the Weekly High Five Tracker, a departmental scorecard for leading indicators, and a 52-week cash flow forecast. Josh also reveals advanced credit card strategies to optimize cash flow, emphasizing proactive management, team accountability, and the importance of focusing on activities that drive results for sustainable business growth.
Join Josh Hadley on the Ecomm Breakthrough Podcast as he shares his journey scaling an ecommerce business from zero to eight figures. Discover essential business tips for effective business management, including strategies for tracking leading indicators, optimizing cash flow, and understanding key KPIs. This podcast is your guide to significant business growth and success. 🚀
Tools and Dashboards
“Weekly High Five Tracker”: “00:08:36”
“Custom GPT for Role Profiles”: “00:17:03”
“Weekly Scorecard”: “00:18:51”
“Cash Flow Forecast Sheet”: “00:26:10”
Books
“The One Thing by Gary Keller“: “00:14:06”
Websites and Services
“ChatGPT“: “00:16:06”
“Melio“: “00:39:37”
“Plastiq“: “00:39:37”
Key Metrics and Indicators
“Total Advertising Cost of Spend (TACOS)”: “00:19:47”
“Conversion Rate”: “00:20:12”
“Average Order Value (AOV)”: “00:21:12”
Credit Cards Mentioned
“Chase Sapphire Reserve”: “00:44:19”
“Amex Gold Card”: “00:44:19”
“Amex Plum Card”: “00:44:19”
“Chase Business Preferred Card”: “00:44:19”
“Chase Business Premier”: “00:44:19”
“Capital One Spark Cash Plus”: “00:44:19”
“Citi Executive World Elite”: “00:44:19”
Concepts and Strategies
“Credit Card Hack”: “00:36:40”
Chapters:
00:00:00 Introduction to the CEO Dashboard
Josh introduces the concept of the CEO Dashboard and the importance of tracking business health with three key reports.
00:00:58 Personal Story: Running Out of Cash
Josh shares a pivotal January 2024 experience when his business couldn’t fund payroll, leading to key lessons learned.
00:01:52 Lessons Learned from the Cash Crisis
Josh discusses the root causes of the cash shortfall: inventory issues, team misalignment, and lack of cash forecasting.
00:04:46 The CEO’s Three Key Priorities
Josh outlines the CEO’s main responsibilities: casting vision, having the right people, and ensuring the business never runs out of cash.
00:05:38 Desert Island Exercise & Dashboard Mindset
Josh introduces the “desert island” exercise and the mindset shift from lagging to leading indicators in business management.
00:06:32 Leading vs. Lagging Indicators Explained
Explanation of leading and lagging metrics, and why CEOs should focus on leading indicators for future business impact.
00:08:36 Tool #1: Weekly High Five Tracker
Introduction to the Weekly High Five Tracker, a tool for tracking the five most important weekly actions for each team member.
00:09:37 How the Weekly High Five Tracker Works
Step-by-step process for using the tracker: team member input, manager review, and accountability conversations.
00:13:13 FAQs and Best Practices for the Tracker
Josh answers common questions about the tracker, role profiles, and the importance of defining “the one thing” for each role.
00:16:06 Customizing Leading Actions for Your Team
Advice on using ChatGPT to identify high-leverage actions for each role and building custom role profiles.
00:17:54 Tool #2: Weekly Scorecard
Introduction to the Weekly Scorecard, which tracks leading indicators and metrics at the department level.
00:19:47 Examples of Departmental Leading Indicators
Detailed examples of leading indicators for sales, marketing, product development, project management, and account health.
00:21:12 Year-over-Year Metrics and Warning Signals
Importance of tracking year-over-year metrics to spot early warning signs and avoid surprises in business performance.
00:25:09 Supply Chain and Inventory Management Metrics
Key inventory and supply chain metrics to monitor for maintaining efficiency and preventing stockouts.
00:26:10 Tool #3: Cash Flow Forecast Sheet
Introduction to the Cash Flow Forecast Sheet for projecting cash balances and preventing cash shortfalls.
00:27:18 How to Build and Use a Cash Flow Forecast
Step-by-step guide to forecasting cash inflows and outflows, including vendor payments, payroll, and credit card expenses.
00:36:40 Credit Card Strategy for Cash Flow Management
Josh’s credit card “hack” for extending payment cycles and maximizing working capital using multiple cards.
00:39:37 Paying Vendors with Credit Cards & Fee Arbitrage
How to pay vendors via credit card (using services like Melio or Plastiq), offsetting fees with rewards and tax deductions.
00:41:36 Optimizing the Cash Conversion Cycle
Strategies for negotiating payment terms, stacking credit card float, and improving the cash conversion cycle for growth.
00:44:19 Favorite Credit Cards for E-commerce
Josh shares his top business credit cards for maximizing rewards and extending payment terms.
00:46:17 Recap: The Three Dashboard Tools
Summary of the three dashboard tools and how they help CEOs maintain focus, accountability, and cash flow.
00:48:13 Call to Action & Closing
Josh invites listeners to leave a review, share the episode, and access the templates, closing with a reminder about focus and systems.
Transcript:
Josh Hadley 00:00:00 So imagine you’re on a desert island. You’re stranded, you don’t have your computer, you don’t have your phone. You’re just going to get three paper reports delivered to you. How are you going to know whether your business is going to be crushing it while you’re away, or it’s about to fall into the pits of despair? So today I’m going to introduce you to that answer. And this has been the CEO dashboard. Welcome to the Econ Breakthrough Podcast. I’m Josh Hadley. I’ve scaled my own e-commerce brand from 0 to 8 figures, and I’m actively building towards nine figures in sales. This podcast is where I document that journey and share the systems, the strategies, and the lessons learned in real time so that you can learn what actually matters and scale your own business. Have you ever wondered the best way to actually manage your business as a CEO, and do you wish you could actually see one specific dashboard that would tell you the exact health of your business, whether you are winning or losing? Today, I’m going to be introducing to you three different tools and dashboards that will allow you to effectively manage the business as the CEO.
Josh Hadley 00:00:58 So today we’re going to dive into the CEO dashboard. First off who am I. My name is Josh Hadley. First and foremost I am a man of faith. I am a husband to a beautiful wife and four children, and I have been selling in the e-commerce space for over ten years now, and a multi-million dollar seller on all sorts of platforms TikTok, shop, Shopify, Amazon and more. And also the host to the number one business strategy podcast for ecommerce that is the E-com Breakthrough Podcast. Today, I want to start by sharing with you a story. I want to bring you back to a point in time. In my business, this was January of 2024, and I remember like it was just yesterday going upstairs to my office and it was a cold day. So I love turning on the heater on a cold day. So cranked up the heater got down into work. It felt like any other day, but just beyond that was going to be a phone call that I was dreaded to take.
Josh Hadley 00:01:52 And this phone call that I received was from my accountant on my team that informed me. Hey, we don’t have enough money in the bank account to fund payroll. What do you want me to do? That was the very first time in my business where we did not have enough money in the bank account to be able to fund payroll, and that was a terrible feeling. A terrible feeling, because to me, the business was not working. If I had to dip into my own personal funds to be able to fund the actual business. It meant something was completely wrong. The problem was, at that time I was very stressed out because I didn’t know why we were out of money. I looked at the bank account and sure enough, she was correct. We were out of money. But my problem and where I was more stressed was, yeah, I could go dip into my own personal bank account to go fund payroll. But the real problem is why did we run out of money in the first place? Why are we in this situation? And it was from that standpoint where I felt, you know, to be honest with you, I felt like the worst business owner Ever.
Josh Hadley 00:02:56 I felt like I had failed miserably. I had failed my family. I had failed the business, and everything was about to come crumbling down. That’s what it felt like. That’s what was on my shoulders. But what I did, it put my back up against a wall and it forced me to learn some lessons. And from those lessons came what I’m going to be sharing with you today. So what were some of those lessons that I learned? Well, number one, what happened to all of our cash? Is it simply just moved over into inventory? So obviously one of the good lessons learned there is you should be looking at your balance sheet on a monthly basis. That’s a podcast for another day that we’ll be diving into. But I had realized that my supply chain team at the time had not been following our SOPs. They had been making some erroneous errors and placing some orders for products that we did not need to place orders for. So that was problem number one. Problem number two, because I had team members that were not even following my playbooks, I had the wrong people in the wrong seats on my team and I wasn’t doing anything about it.
Josh Hadley 00:03:54 Lesson number three is I didn’t have a way to actually forecast my cash to be able to see, hey, by the way, here’s some flashing warning signals. You are going to run out of cash on this specific day and time. Had I just had the foreknowledge to have a sheet that I was actually monitoring and measuring, I would have known and been able to see that way far off into the distance, and it would have been able to course correct much quicker than just being very reactive and waiting for that phone call from my accountant to say, by the way, you don’t have enough money for payroll. Okay, last but not least, I learned that I was not being a good CEO. I failed as a leader, to be honest with you, if you run out of cash in the business as the CEO, that’s your responsibility and you have failed as a leader. That’s how I felt, and those were the lessons that I learned. So today, what I learned from that is going to be how I approach operating a business as a CEO now.
Josh Hadley 00:04:46 And this is what I believe is what a CEO should be focused on in any business, whether it’s e-commerce or not. Any CEO should be focused on these three key priorities in their business. First and foremost, your job is to cast a vision of where the business is going and how it’s going to get there. Okay, so what’s your big audacious goal over the next 3 to 5 years, and how’s the team going to be able to achieve it? Number two, you want to ensure that you have the right but in the right seat. You’re driving the school bus down the road. You got to make sure the right people are jumping on the bus. And then at the same time, you need to make sure that the right people are in the right seats on that bus that you’re driving. And third. The final thing I think this cannot be talked enough of, talked about enough, which is to ensure that the business never runs out of cash because the cash is like blood to the human body where we die if we lose a lot of blood, and if we have no blood, obviously we can’t live well.
Josh Hadley 00:05:38 Likewise, a business cannot survive without cash. So we’re going to be diving into this. And the frame of mindset where I learn kind of this CEO dashboard and how I began implementing it into my business came from this exercise that I learned about at one mastermind meeting. And it’s this imagine that you are stranded on a desert island and could only receive three reports from your team. Okay, what would those reports contain? Because from those reports, you need to know whether your business is in a good position right now, whether it’s moving in the right direction or not, and whether you’re going to be achieving your goals. So imagine you’re on a desert island, you’re stranded, you don’t have your computer, you don’t have your phone. You’re just going to get three paper reports delivered to you. How are you going to know whether your business is going to be crushing it while you’re away, or it’s about to fall into the pits of despair? So today I’m going to introduce you to that answer. And this has been the CEO dashboard.
Josh Hadley 00:06:32 Okay. So this CEO dashboard contains three effective tools that are going to help you be able to manage the business as a CEO. Let’s dive into tool number one. But before we get there you have to experience a mindset shift. And this is the first mindset shift that you have to experience. There are two different like metrics that you can always measure in a business. Number one is leading indicators or metrics and then lagging metrics in a business. So what’s the difference? Let’s put this very simply in an analogy that all of us can understand. If you want to lose weight, a lagging metric is going to be your actual weight. A leading indicator for what your weight is going to be is, hey, how many calories did you consume today? And by the way, what types of foods did you consume those calories with? Because if you look at what those leading indicators are, it’s the inputs going into the system, right? And also how much, how many, how much exercise did I get during the day? How many calories did I actually use my body use? Right.
Josh Hadley 00:07:36 Those are all leading indicators. And then guess what? A month later I’m now going to look at my weight and that’s going to be my lagging metric. So how does this apply to business? Guess what. Your PNL statement that profit and loss statement that you should be looking at on a monthly basis. Your profit is a lagging metric, and the leading indicators of your business are the activities that you probably worked on six, maybe even 12 months ago. It stems that far back. So just know the profit and loss statement that you look at is all historical context. It the past has already been written, so to speak, for you. But what you can impact is the future, and you can impact the future by focusing on what you do on a day to day basis with the leading indicators. So as we dive into the CEO dashboard today, I want you to understand that the entire premise that sits behind the CEO dashboard is that you should be measuring the leading actions and indicators in your business, not so much the lagging metrics.
Josh Hadley 00:08:36 Yes, the lagging metrics are important. I do care about my profit and loss statement. However, what’s even more important than I’m monitoring on a day to day basis in a week over week basis are the leading indicators. So let’s dive into tool number one. This is the weekly high five tracker. So the weekly hi five tracker is specifically targeting the leading actions that are being taken in my business on a daily and weekly basis. So what’s going to happen here is every team member is going to be focused on what their essential inputs are. So this weekly tracker really is boiling down to the Pareto principle, the 8020 principle that I love so much. I’m always talking about that with my team. But this principle is essential because it’s 20% of my team’s actual day to day inputs that are going to drive 80% of the results. So what I need to get really, really good at as a leader is architecting and informing my team and helping them stay laser focused on those 20% inputs that are going to drive the 80% of results.
Josh Hadley 00:09:37 And that’s exactly what this weekly High five tracker does is we have identified for every role in our business. Hey, these are the five leading actions that you should be taking on a weekly basis. In your specific role, you need to be completing these because we know as a business, if you do these things, it will lead to the 80% of results that we are looking for. Okay, so this is how the weekly hi five tracker works. Number one, every team member is going to fill out a form every Monday morning by 9 a.m. central time for us. Point number two, the manager is then going to review the input and then speak to each of those individual team members to understand if one of those, you know, one of those 5 or 3 of those five, doesn’t matter how many, but if any one of those metrics that they have marked as a no, they did not get them done last week. That’s the time that they have to kind of explain themselves. And the manager has to know the answer, because I’m going to be going to the manager asking why this is in the red or this is not completed.
Josh Hadley 00:10:39 And last but not least, the manager needs to be able to add notes to that form that was filled out as to why this metric is off. So let me show you what this actually looks like in real time. So step number one is the team member is going to fill out the Google form. So if you’re watching this on YouTube you can actually see the actual form. This is literally a screenshot of the actual form my team members are going to complete every Monday morning. Okay. You can see it’s very simple talks about what week are we on. And then did you do leading indicator number one. Did you do leading indicator number two, number three etc.. The reason why it doesn’t specify what is leading leading indicator number one or 2 or 3 is because guess what. Every team member has different leading actions that they are focused on now. It’s important they all need to understand what their leading actions are. So that’s important. You do need to convey that to them. But this is a generic form that everybody on the team fills out.
Josh Hadley 00:11:32 Okay. Step number two. After the team members have all completed their form during the weekly one on one meetings that all of our managers have with their direct reports. It’s in those one on one team meetings or one on one meetings with their manager that they are going to have a conversation and they’re going to review the answers that they submitted in that form to say, hey, did you complete all of your leading actions last week? If the answer is no on one of those, I want an answer as to why and what prevented you from getting that done. And here’s what you’re going to find out. If you hold people accountable. Most of the time they do. They they get distracted just by random silly things. It was like, well, you sent me a report that needed to be done on Thursday afternoon, so it kind of got me sidetracked and I didn’t end up doing X, Y, or Z. And then you come back and you bring it back home, and then you have to say, that’s great.
Josh Hadley 00:12:21 Guess what? There’s always going to be ad hoc things that get thrown on your plate. But these five leading actions that you take should never be missed. And these are why they’re so important. So at the end of the day, this gives you and your managers a really good talking point to just bring people back to, hey, that’s great. I know there’s 1,000,001 things that we could all be doing in the business, but these are the most important because it’s way too easy for people to get sidetracked. All right. Step number three. Now that you’ve had those conversations, the manager then needs to add notes into this tracker as to why that specific task did not get done or that specific leading action was not handled appropriately. So you can see if this is just in a Google sheet. We just add a simple comment, as you can see on the screen here. And what I want to see in that comment is like, what happened? And then what what actions are we taking to change this to ensure that every week it’s not just on repeat.
Josh Hadley 00:13:13 It’s like, oh yeah, well, we’re always just saying, hey, we didn’t get around to it. We didn’t get around to it. That’s not acceptable. So what this does, is it at least provides a framework for you to be able to focus and keep people accountable on your team in a very low risk manner, where they just understand what the expectations are. So let’s go through a few FAQs. As people have seen this sheet, these are some of the questions that most people ask. So what is actually included on this sheet. So take a look at this. You can see it on my screen right now. Again for those people listening. Make sure you come check it out on YouTube. But first and foremost, every single person’s name underneath their name here on this spreadsheet, it has their role profile. So what is their role profile? Well, their role profile is specifically their job description, everything that they are responsible for. And it also identifies these core KPIs or these leading indicators that they need to be focused on.
Josh Hadley 00:14:06 And so again, it just serves as like a real key focal point where the manager can always refresh themselves as well as the team member. What am I actually hired here to do? So that’s the first thing. This becomes a great document to keep everybody just simply reminded on. Like, why did we even hire this role to begin with? The next thing is one of my favorite things, and this comes from one of my favorite books called The One Thing by Gary Keller. Okay. We have what we call the one thing for every single role in our business. The reason this is so important is because there is truly something in every single role. That is the leading like indicator or the big domino, where if you knock over this thing, everything else just becomes ten times easier or automatically gets completed because you’ve focused on the one big thing. So it’s always the one thing, is what we term it for every single one of those roles. And you can see some of those examples here. The next thing that we have is, as you can see on this screen, there are in this case five instances where a team member did not complete a leading action in a given week.
Josh Hadley 00:15:11 And so what happens is if it goes red, if it says no, this did not happen this week. There must be a note added here as to why it did not happen, and a course correction path to say, by the way, in the future, this is what I’m going to change to ensure or prevent this from occurring again as much as possible. And then you can see here as well this spreadsheet specifically lists out the five specific leading actions that we need. Being taken every single week, week in and week out. And it’s very clear again, it’s another great reference point for the team and the manager to know exactly where the time and effort should be invested for every single role in the business. I want to give each of you a secret tip. So you may be asking, well, hey Josh, can I just see, like, can you just show me all of your, like, high five trackers for like, what are the core leading actions that you have for every single one of your team members? I’m not going to give you that cheat code.
Josh Hadley 00:16:06 And the reason why I’m not going to give you that cheat code is because it’s not going to do you justice. And the reason why I say that is every business is unique, every role is unique. There are many roles on my team where I have people wearing multiple hats, and there are multiple roles on my team where somebody is extremely specialized, doing one specific thing just because you hear somebody has a customer service agent, probably doesn’t mean my customer service agent is doing the exact same thing day in and day out. And what needs to be done in my business. So what do you do then, if I’m not going to give you the cheat sheet of like, oh, here’s all the leading actions you should be worried about. What I am going to tell you is like, it’s super easy to do and to streamline with ChatGPT. So use ChatGPT to explain the role, to explain the job description and then say, hey, what do you believe? Chat is the 20% of inputs for this role that are going to drive 80% of the results and ask it to give you like 20 different ideas, and then very quickly you can whittle that down yourself.
Josh Hadley 00:17:03 And it’s also fun to ask chat to be like, all right, there’s 20. Give me the most highest leverage ones to get to ten. All right. Now that’s great. We got to ten leading actions. Now I want you to give me seven. What are the most highest leverage activities okay. Now that we’re got to seven now give me five okay. So that’s how specific I want to get. And you can just like use chat to help narrow it down if you want, but you want to force it to give you five leading indicators that are super powerful for every single role. And then you want to actually include those in your role profile. So if you haven’t built role profiles I am giving you a cheat code. Here is a custom GPT that I did create. So in a role profile, if you want to hire a customer service representative or if you need a supply chain manager, it doesn’t matter what the role is. Use this custom GPT and it will spit out a role profile or a job description for you.
Josh Hadley 00:17:54 And it’s going to list like 20 different KPIs that you could utilize to track their performance with this team member. So who of you listening to this? Raise your hand, leave a comment if this is something that’s piqued your interest. If you would like a copy of this template that I do have that I share with my own team, if you want to basically be able to rinse and repeat this with your own team, go ahead and leave me a comment. Now, what we’re going to do next is we’re going to go into tool number two. Tool number two is the weekly scorecard. As we dive into tool number two which is our weekly scorecard, it’s important to understand that this weekly scorecard is moving from leading actions to now. I’m specifically monitoring the leading indicators or the leading metrics for the business, and I’m not measuring the lagging metrics. So that’s an important distinguish is first and foremost the way we are tracking our team members and where they’re investing our time. Those are the leading actions. Now I actually want to verify the actual output.
Josh Hadley 00:18:51 So I want to see what type of output are we actually getting from the 20% of inputs I want to begin to see. And these are going to be the leading indicators. And the reason why they’re not yet a lagging metric is because they’re still early enough. And I’m going to show you what those metrics actually are so that we can measure them because they have not fully ripened into a true profit or loss quite yet for the business. So let’s dive into this. The leading indicators and metrics are broken down by department. So I’m not even measuring people on a on a daily basis here or an individual role basis. I’m measuring people on a weekly basis and I’m measuring the entire department. So guess who’s butts kind of on the line, really. At the end of the day, it comes down to that department head or that manager that’s overseeing everybody. So what you’re going to look at and in this example is I’m looking at my sales and marketing department. These are the leading indicators and metrics that we’re looking at.
Josh Hadley 00:19:47 So what are some of these examples from an Amazon Pay per click advertising perspective I’m measuring the following. What is my total advertising cost of spend or my tacos? What percentage of my sales came from ad sales and what percent are my? Is my total average cost of sales or tacos compared to last year? Am I beating last year? Am I more efficient than last year, or am I actually starting to perform worse than last year? Okay, and then I even have it broken down. Broken down. I think there’s a specific nuance. I have very mature products that are in the, you know, more mature product lifecycle stage. And then I have new product launches. So for mature products, I have a tacos percentage that I’m trying to get below 15%. And then for new products, I’m trying to make sure it’s below 25%. Then below that I have on my Amazon detail pages or on Shopify, this is just my product detail page or the listing page, right? Which is what is my overall conversion rate? What is my conversion rate year over year? Is my conversion rate increasing or decreasing year over year? And what are the total sessions compared to last year as well? Am I getting more traffic to my sales page, my product page detail page on Amazon, or my actual product listing on my Shopify storefront? I want to know, am I gaining more traffic or not? And then I’m going to go through like total sales versus the prior year.
Josh Hadley 00:21:12 I’m going to look at the average order value. I’m looking at the total units that were sold. I’m looking at the total number of orders. I’m looking at the AOV, I’m looking at the refund percentage, I’m looking at the percentage of, of the cell that is going to. Like Amazon fees. So kind of like my commission percentage there. I’m also looking at what my estimated Cogs are as a percentage of sales as well. And then I’m comparing that to my year over year metrics. Now, the reason why this is so important and the way and the reason why I’m measuring so many year over year metrics is because rather than just looking at my profit and loss statement and then being surprised, I can see fluctuations week over week. And I love targeting the same week last year to the same week this year because it removes the seasonality component. Whereas if I measure this month, the beginning of this month compared to last month, my sessions might be up, but my sessions are up because it’s now December 10th, whereas before last month it was November 10th.
Josh Hadley 00:22:13 Right. And so there’s much higher like gift search volume, etc. on Amazon in December. Then there is in November. So that’s why I’m looking year over year. I want to continue to see growth. And if I’m not seeing it, this is going to flash me some warning signals to say, hey, your conversion rate is dipping lower than what it was the same time last year. Hey, the number of people coming to visit your product detail page is lower than it was this exact same time last year. These are going to be warning indicators. It’s not saying that something is completely broken in your business, or you’re going to have negative net profit or anything, yet it is just flashing some warning signals for you. So that is exactly how we have it structured for every single department on our team. Another example here is for our product research and development team. For them, their leading indicators are every week are we finding 20 new products and do we have do we have at least 27 new products on our future launch plans for project management? I’m looking at what was my on time on time like project completion percentage.
Josh Hadley 00:23:15 I want that to be 90% or higher. How many tasks are overdue in the business? Because I want to know whether my team is is actually doing what they say they’re going to do, or if they’re just like, hey, it’s 5050. Sometimes people do it by the deadline. Oftentimes we’re having to follow up with people. This is where, again, you get to manage the culture of the business. If you see people being frequently late just to turn in simple projects, you’ve got to nip it in the bud. And so that’s what this this dashboard does for you is, again, sharing some leading indicators or metrics for you to identify. Hey, I’m going to flash some warning signals for you before your project management process completely falls apart. I’m seeing that only 50% of your projects are getting completed on time, so it’s going to tell you where the the next possible constraint in your business is going to be found in the Amazon account. Health and support. You can see I have a very, very lengthy list here.
Josh Hadley 00:24:08 But I’m going down like what’s my Amazon account health score. What’s my policy compliance percentage. Have we had any safety issues? Any issues with Amazon scanning barcodes or inaccurate quantities in our shipments? There’s a whole host of things that Amazon tracks for you. And so before I wake up one day and it’s like, hey, you’re shipping privileges into FBA are now suspended. I would have seen warning signals well before I get some suspension related email from Amazon. So again, that’s why this is so important as a CEO to be looking at. You’re constantly on the lookout for warning signals. What should you be looking out for in your business if you’re not going to make any changes? What potentially becomes unavoidable and you create a car crash in the future, that’s what you’re looking out for. Last but not least, I’m going to share like supply chain inventory management on a week over week basis. I want to see that we have less than five products that are out of stock. I want to see that our total percentage of inventory sold is increasing week over week and again year over year.
Josh Hadley 00:25:09 I want to see that percentage shift to ensure that we’re actually being efficient with the amount of inventory that we’re holding on our balance sheet. I want to know what my IP score is on Amazon again if that dips to low. Now I’m going to have problems with getting shipments into Amazon because now I’m going to have reduced storage storage space. And again, right before a holiday season, even more important to be making sure that your metrics are trending in the right direction. Because if they’re not, that’s when you get the reduced storage space and then shipment problems, any outstanding shipment problems, shipping with missing tracking IDs, etc. those are really basic things, but things that you want to track so that you can uncover. Hey, maybe here’s some inefficiencies in the business that they could snowball and compound and really derail the business if we don’t handle these things correctly. So I hope you’ve been enjoying this so far again by show of hands, if you’re watching this or if you’re listening to this, leave a comment. If you would like access to a fill in the blank template for this leading indicator CEO scorecard Dashboard.
Josh Hadley 00:26:10 Let’s dive into our third and our final tool here. This is the cash flow forecast sheet. I want to ask you all who can relate to this. I played the game of ecom properly and all I ended up with was nothing in my bank account but a lot of large sales figures on Amazon, right? I think a lot of us could say, hey, yeah, we’ve seen those times where we made multi-million dollars on Amazon. But then I look at my bank account and then I wonder, where in the world did all my money go? How in the world am I profitable on my profit and loss statement? But then I have no money in my bank account. I told you this earlier with my first story, which is one of the most important roles that a CEO has to be responsible for, is never running out of cash in the business and in the e-commerce space. This is so critical, and it’s also the most challenging out of any business model that is out there. E-commerce is one of the most challenging any physical products businesses, because the amount of working capital required to run the business is extremely high compared to like a software business or to something like a service business where you’re typically getting paid upfront and not having to.
Josh Hadley 00:27:18 Outlay cash upfront before you actually make the money. But I’m going to share with you how that can be game changing for your business if you can flip the model on its head. So I want to introduce to you this cash flow forecast sheet. Now what this thing does, it’s going to help you forecast cash in your bank account over 52 weeks. It’s going to include the timing for any of your credit card payments, any of your vendor POS, your agency invoices, or even your payroll expenses. And then it’s going to help you visualize when you’ll be cash flow positive or negative, and how much cash you’re going to need to stay afloat, and to basically bridge the gap of not having enough money in your bank account. Here’s the most important thing in the way that I’ve implied it into my own business. Before I ever place a new Po for a new product launch, we put it into our cash flow forecast sheet, and my supply chain team is the one who does this now. Not even myself, but they have to know whether we are going to be setting ourselves to succeed or fail when it comes to cash in our bank account, when it comes time to pay that invoice.
Josh Hadley 00:28:22 So before we ever place that order, we first look and say, are we going to have enough cash in the bank account? If not, maybe it’s just a matter of a one week difference. If we could just wait to place this Po just one more week. Actually, it makes a difference because I’m going to get my Amazon disbursement or disbursement from another marketplace, and so I’m going to be covered when that comes in. But if you’re not, if you have no idea what I’m talking about right now and you’re just placing POS, you’re like, oh, I just I need a place right now just because I’m running out of inventory. You are missing the most important fundamental aspect of running an e-commerce brand, which is cash flow management. So this is what this cash flow forecast sheet looks like when it’s filled out. I want to walk you through a very, very simple model here. As you can see, we have our opening cash balance at the beginning of every week. That is how much money is sitting in our bank account at the beginning of that week.
Josh Hadley 00:29:12 Then what you’re going to go down here is you’re going to go through it. You can see this more visually on YouTube here. But everything at the top is kind of like these are good cache things. And then below that this line I have bad things that happen to cash below it. So on this top line you have Amazon deposits right. Amazon’s sending you a disbursement. Or maybe it’s Shopify, maybe it’s TikTok shop Walmart etc.. Okay. You’re going to get a disbursement. And with Amazon, you know it comes every two weeks. So I can plot every two weeks. And then what you need to do is you need to forecast, well, how much is Amazon going to be giving me? Well, if you’ve been in business for at least over a year, the good news is you can go back and see, hey, this same time period, the same week last year, how much did Amazon give me as a payout last year? Then ask yourself, well, have I doubled since then? Have I only grown 10% since then? So if you’ve doubled, go ahead and double what that disbursement amount is going to be as a again quote unquote.
Josh Hadley 00:30:11 It’s a forecast. If you’re only up 10% this year, then take last year’s disbursement amount, assuming all of your prices have remained the same and things like that, then your disbursement will arguably be similar, but maybe 10% higher. So you can forecast that into this week over week. And you can do this again. If you’ve been in business for 52 weeks, at least you could go back in time and go and plot all of this for the future. 52 weeks, based on what your current growth rate is. So now that you’ve plotted what your disbursements are coming in, now you’re going to plot. When do you when do you have to pay your credit card bills? So my favorite thing is every expense in the business that I can goes on a credit card. Right? All of my software expenses, everything. Because it’s going to make being able to forecast cash flow ten times easier. And here’s why. If everything gets billed onto a a credit card, I know when my credit card comes due.
Josh Hadley 00:31:06 And here’s the benefit of that. I can now say, okay, if it’s due at the end of June, I can put that on my spreadsheet and I can know exactly what amount is going to come out of my bank account on the exact day and time, rather than if there’s just 1,000,001 different softwares that are on ACH, withdrawal or things like that. That’s that’s just a nightmare to have to like try to forecast and know, oh crap, which subscriptions getting drawn out from my bank account today. So whenever possible I love even if I have to pay the 3% credit card fee, I would much rather do that because then I’m going to arbitrage it with some credit card reward points that I’ll show you. Okay, but that’s first and foremost. You’re going to plot when the due date is that you have to pay your credit cards and whatever that balance is that has to be paid at that time. Remember, if you’re using credit cards, pay off your whole balance at the end of the statement period.
Josh Hadley 00:31:55 I’m not saying keep a rolling balance. I’m telling you, charge everything to a credit card, then pay off the whole credit card every single month. That’s when the strategy works. Okay? Then what you’re going to do is I’m going to list all of my non credit card vendors. So these may be vendors that I have to pay. If I’m sourcing stuff from China I’m going to pay typically like 30% upfront and then 70% do at shipping. So now I’m going to I’m going to plot that. So let’s say this is the beginning of week one of this entire year. And I know that within 30 days they’re going to be done manufacturing this product. So it’s $100,000. Poh. So on week one, I’m going to have to pay via ACH or wire transfer $30,000 for this Po. Okay. And then what I need, I know that in 30 days the product is going to be finished. It’s going to be ready to be shipped. So I’m going to forecast and put another $70,000 as a payment that’s going to be withdrawn at the end of January, 30 days later.
Josh Hadley 00:32:54 Okay. Now that I’ve done that, now I know what’s going to how this is going to impact my cash. I’m also going to add, if you have an Amazon PPC agency or if you have any other type of agency that you’re working with. I’m going to add hey, this is when it’s due, when I have to pay them, whether it’s via ACH or whatever means you’re paying them with. And then I’m also going to add my overhead. So my payroll that I need to pay my team, that’s probably every two weeks. So you plot that in every two weeks. What is that amount. And again just forecast. What did you pay them last last month. Okay. And then simply add this into this cash flow tracker. Now if you follow this example all along the way, you will notice that overall I have enough money coming into the business except for one week. And that’s week number four on this spreadsheet and on this spreadsheet, I’m going to go into a negative balance of $27,000 and $27,500.
Josh Hadley 00:33:51 I’m going to be in the negative. However, the good news is just around the corner. The following week, I’m going to get a $75,000 disbursement from Amazon. So technically I’m actually good. Like, the business is healthy except for this like little time period. So as you can remember, go back to what I said earlier. Could it make just the slightest difference by delaying your Po just by one week? This is the perfect example where yes, by just adjusting it by one week, you’re going to see that instead of going cash flow negative, you’re going to remain cash flow positive in your bank account. Most entrepreneurs are getting stuck because they see that negative account and or a $0 balance. And then what do they do? They immediately go take out a loan or go to take what I call one of the predatory, pre disbursement, you know, handouts from the many different vendors that are out there saying, hey, we’ll front you the cash. We’ll just use your, we’ll use all of your capital, your Amazon inventory as collateral for you.
Josh Hadley 00:34:50 But we’ll fund what Amazon’s going to disperse you. Trust me. You are paying so much in interest to those people. It’s genuinely not worth it. So just by adjusting it by one week, you don’t even have to have that conversation. You don’t need a loan. But what does this tool really do? It really helps you identify when you actually need a loan, and whether you do not need a loan, and how long you might need to have that loan for versus not. Okay, I am not a fan of having debt whatsoever. And to be honest with you, in an e-commerce business, if you are having to take out debt, it means there is something broken in your business. It’s either a you have a massive growth going on and you have a massive opportunity. Let’s say you got a big Po from Costco or Walmart, and you genuinely don’t have $500,000 currently sitting in your bank account to go buy a whole lot of inventory that Costco is going to want. That’s a good problem to have.
Josh Hadley 00:35:47 And we can go finance that. That’s good. But if you’re just trying to bridge the gap of just like regular replenishment orders for your business, that’s when I say you have a problem. That’s when your business is broken, broken. But if you’re having to take out a loan because there’s a massive upswing, because like something unlocked and typically that’s going to be more often than not, big retail purchase orders would be the one exception to the rule where I think like debt is wise in that instance. But I’m going to share with you why I think you can avoid debt in its entirety. I don’t think you need lines of credit now. They’re always good to have open just to have a safety net. But this is why you shouldn’t even need to dive into those. You don’t need to go to the predatory prepay advances or pre disbursement advance companies that are all out there sucking your blood. Okay. So here’s what you’re going to do. This is what I call my credit card hack. Step number one you’re going to open multiple credit card accounts.
Josh Hadley 00:36:40 You’re going to open these on different days of the week. So ideally stagger them out so that you have open a new card on the first. Open another card on the seventh, the 14th, the 21st, the 28th, etc.. If you are an Amex customer, that’s a good news because you can just reach out and have them change your statement. Start dates and I’ll show you why this is so important. And here is a double secret tip for you if you’re concerned about, like, not having a good credit score or having your credit score deemed too often, but you need to open up multiple credit cards all at the same time. Open up multiple browsers all at the same time, and make sure you click the apply button within like a few seconds after each other. And then it’s not going to be able to have enough time to actually show up and hit your credit report. So you’ll be able to, like, get authorization on your existing credit score without having any impact of like, oh, this other company pulled your credit, so now it’s going to go lower.
Josh Hadley 00:37:30 So that’s just a quick tip for you. If you ever want to open up cards, do multiple at once and literally do them simultaneously within a few seconds of one another. Step number two, you’re now going to document when your credit card statement dates begin, i.e. the fourth of the month. Okay, then step number three, you are going to process the charges within the first 1 to 5 days of the statement period. This is going to give you 55 days until the cash actually leaves. So what am I talking about? There’s a great visual here if you’re watching this on YouTube, but if you’re just listening to it. If you charge, if your statement start date started on January 1st and I charge, let’s say I charge a $50,000 Po to my credit card on January 2nd. Well, my statement start date doesn’t close until January 31st. Then guess what? I have another approximately 25 days until that $50,000 statement. Balance comes due to where I get to pay it off in full. No interest, no penalties, nothing.
Josh Hadley 00:38:29 I have now went from I charged it on January 2nd. The cash for that $50,000 is not leaving my bank account till what, February between the 20th and 25th? How magical is that? That originally something that was leaving my bank account the first week of January now doesn’t leave my bank account till the end of February. That is where the game begins to change for any e-commerce business. So what does that mean you should do? You should be paying your suppliers and even even your agencies that you have to pay with ACH or wire transfer. My argument is that you should be paying them with credit cards, and the reason why is because you are going to come out way far ahead. The most important thing here is going to be your cash conversion cycle. That’s going to allow you to scale infinitely compared to being like being cash strapped constantly and having to take out loans, and then those loans are going to incur interest, and then that’s stealing more of your profit margin, leaving you less money to invest in new product launches and new channel distribution, etc., etc. cash is the lifeblood of any e-commerce business, so I want to share with you just a very simple example.
Josh Hadley 00:39:37 So if you want to pay a supplier invoice for $20,000 now again they’re going to want this as a wire transfer or an ACH transfer, which is great. You can use the following two options. Use million. That’s million with an M at the beginning or plastique with a Q at the very end. All right. So Millie or Emilio or Plastique are your preferred options. They’re going to charge you a 3% fee to be able to process this on a credit card. And then they’re going to take your money, they’re going to wire it to your vendor. And so your vendor still gets paid just as though you paid them. They have no idea that Emilio or Plastique sits behind all of this. They don’t even care. But for you, there may be some of you listening that you’re like, you’re an idiot. Why would you? Now you’re just increasing your the cost of your goods, right? You’re now it went from $20,000. Now tack on a 3% fee. On top of that, I’m going to show you how all of that gets eliminated.
Josh Hadley 00:40:33 So plastic fee is going to be 2.9%. So that’s going to be $580. That’s a fee I’m going to have to eat. But guess what. If I use a good cash back rewards credit card that’s going to give me 2.5% cash back. All right. That’s going to be $500 worth of value. And then guess what else has has to happen. That plastic fee of $580. Well guess what? That’s tax deductible to the business. So what ends up happening is that $500. That’s cash back bonus. That goes to me tax free. And then I also get a tax deduction on the business at $174. So my total net benefits when all is said and done is $706.88. And the actual cost of the business is $0. Basically, what you’re arbitrage now, you’re arbitrage ING your credit card reward points and your tax rate, whatever taxes you’re paying, if you’re in a high tax state like this, gets that much more impactful. So that’s why this becomes so important. And one of my favorite things.
Josh Hadley 00:41:36 So again, just to like exemplify this standard 30 days upfront shipping, percentage and then 70% of your inventory order is due at the time it ships the way this looks. The standard inventory model for an e-commerce business is I buy my inventory, then I pay for my inventory. Then I’m going to eventually sell my inventory. Then eventually I’ll collect the cash once that’s sold. That’s traditional e-com. Here’s where this gets super exciting. Imagine if you were able to negotiate net 120 day payment terms with your supplier. The reason why I say that’s possible is because I’ve heard multiple people have that type of setup. Then on top of that stack, the extra 55 days of free credit, using the credit cards on top of that. Then look what happens to this. I buy my inventory. I sell my inventory. I collect the cash. Oh, yeah. And then, by the way, after I’ve already collected the cash, then I pay for my inventory. This allows you to infinitely scale in the game of e-commerce.
Josh Hadley 00:42:34 This is all just a money model problem. And it’s all about that cash conversion cycle. That’s also why Amazon grew so quickly, is because they were ruthless and relentless with when they paid their vendors and their suppliers, and they would try to push it out as long as they possibly could. And the reason why is because they knew that they could scale ten times faster as a business if they make money before they ever have to pay money to be able to make that money. It’s the same principle that applies here in the e-commerce space. So here are some of the cash conversion cycle levers that have a positive lever to your business. And here are some of those. Negative right. If you have less time needed to sell your inventory. you know, smaller purchase orders, those are more positive for your cash flow. On the opposite side, if you need more time to be able to sell that inventory, these are large purchase orders, then that’s going to be a negative impact to your cash. And the list goes on and on here.
Josh Hadley 00:43:27 Payments to your suppliers, if you can push them and extend them. That’s a positive lever to your cash conversion cycle, payments to your suppliers that need to be immediate or don’t have any terms. Those are negative levers to your overall business. And the last thing here is, if you’re able to reduce the amount of time that it takes Amazon to pay you, which could be requesting daily disbursements if you still have that or same thing on TikTok shop or on Shopify changing it. Do you know the default setting for Shopify is like, hey, we’ll pay you every 30 days. Stop it immediately. Change that setting to get paid out every single day on Shopify. Otherwise, Shopify gets to keep your money and that’s why you’re having a cash conversion issue. The more time that these marketplaces get your money, it hurts your cash conversion cycle. As a list, here’s some of our favorite credit cards that we use in our business. We use the Chase Sapphire Reserve for business. This is a 3% bonus on all ad spend.
Josh Hadley 00:44:19 Massive win. Amex Gold cards 4% cash back bonus on your first 150 K of AD spend every year. And by the way, you open up multiple credit cards. You open up at least ten in your name, and then you just cycle through these over and over again. You have your Amex Plum card, which has zero cash reward points, but it extends instead of having a 25 day payment period. Payback period, it extends it to 60 days. So your effect you could effectively charge something on January 2nd. If your statement start date is January 1st and actually not pay it back with no interest, no penalties, no nothing until like the end of March. That’s how powerful that card is. So if you’re in a cash crunch and you can forgo some credit card reward points, it’s a great avenue. Okay, that you have your Chase business preferred card, right? Which is a 3% bonus on your first 150 K. Chase Business Premier gives you 2.5% cash back on any spend that’s greater than $5,000.
Josh Hadley 00:45:14 Most of your supplier invoices are going to be over $5,000, even agency fees, etc. so you can get how to use that as a default. We use Capital One Spark Cash Plus, which is 2% on all spend software. Doesn’t matter what it is, 2% flat. So we’re at a minimum. Everything that we charge to our credit cards is at least earning 2% cash. Back then we have the city executive world elite. If you’re an Admirals Club member with American Airlines, you can get Executive Platinum status. Same thing can be true with Delta, United, etc.. They all have credit cards that they use to gain status. Let’s go back to our original scenario, where we were paying 30% of our payment terms up front, and then at day 30 we had to pay another 70%. So and we were going in the red. But if we now stack without changing, without even negotiating payment terms with your supplier, which yes, is very important and I would do that. But even if you don’t do that just by adding this credit card hack, look how this changes dramatically your cash conversion cycle.
Josh Hadley 00:46:17 You never go red. And in fact, you begin getting into the six figures in the amount of money and working capital that is now sitting in your bank account. That is the power. That’s the magic that sits behind all of this. So I want you all to remember systems and focus scale and the distraction kills. This is why, as the CEO, this is the three dashboard tool that I use to track number one on a week over week basis. What are the leading actions? That’s the high. The weekly high five tracker. Did my team actually complete and focus on the 20% of activities that are going to drive 80% of the results? That’s dashboard number one. Dashboard number two, I’m looking at the CEO scorecard and the the leading indicators or metrics of the business to say at a department level, are there any warning signals that are flashing that we are heading in the wrong direction? And then last but not least, I am looking at the cash flow forecast over the course of 52 weeks to be able to say if I pay or if I place this Po, and this is when I would be estimating needing to pay for it.
Josh Hadley 00:47:19 And here’s the cost. Do I stay in the black or do I dip into the red? In terms of the working capital that I have in my bank account? Those are the lessons that I learned from that 1st January day that was cold, that was dark, and that is ingrained and seared into my memory that I have since corrected by implementing these three dashboards into my business. So if you want access to all three of these tools, Make sure you leave a comment. Make sure that you’re watching this on YouTube, and if so, I’ll give you the one final way for you to actually do this. So here would be my ask. If you want a copy of all of this, here’s what I ask for you to do. Number one leave a review on your favorite podcast platform of your choice. Whether that’s Apple or whether it’s Spotify. It doesn’t matter. If you wouldn’t mind, be so kind. Leave me a review. Tell me that you got some value out of this. Number two, share this episode with at least one other operator or business owner that, like, needs to hear this exact same stuff.
Josh Hadley 00:48:13 Last but not least, I know you’re in some type of mastermind group, whether it’s in a slack channel or a WhatsApp group Facebook group. It doesn’t matter if you wouldn’t mind sharing this exact episode and dropping it in that mastermind group and letting them know the value that you got out of that. I would be eternally grateful for you. And remember, systems and focus scale distraction kills. Here are those slides. If you want to access these slides and these templates, scan this QR code. I hope you found massive value today and good luck on your e-commerce journey.
