09/30/2014 06:06 pm ET Updated Nov 30, 2014

The Cure for Cash Flow Woes

This week we'd like to discuss an issue that uncomfortable for most. It's controversial and personal and may make you squirm a little. Most people avoid the topic. In fact, it rarely comes up in polite conversation, and can even the cause for divorce. We're talking, of course, about money.

Even though money is what keeps an organization alive and you and your family fed, clothed and sheltered, most people have a tough time talking about it. The term itself carries all kinds of preconceived notions and prejudices with it. The actual element of money, or cash flow, is so important to our survival and quality of life that we're often afraid to give it too much thought (almost as if by thinking about it you'll cause it to disappear). Most of us understand what wealth and assets mean, and speak about those things a bit more freely, possibly because they're more abstract, and therefore easier to discuss. Cash flow, however, is where the rubber meets the road, and we feel changes in cash flow more acutely.

Of course, the times when you're least likely to want to discuss cash flow are the times when you don't have enough of it (believe us, we've been there!). In fact, we've found that generally people have two adverse reactions to challenges with cash flow. They either obsess over it or they avoid it altogether.

You might think that obsessing over cash flow would be a good thing if you had a shortage, but obsession is distinct from focus. Obsession is all encompassing, and is rooted in desperation. It often causes us to ignore the whole picture while we search for "quick fix" solutions to a challenge. Often, those quick fixes end up being as damaging as the original challenge itself. In essence, obsession with cash flow is equivalent to panic, which can severely cloud judgment and lead to poor decisions. Which is not what you need in a time of crisis, or any time for that matter!

Avoiding the issue is just as common of a reaction, and is equally ineffective in dealing with cash flow challenges. Avoiding the issue means you ignore it and apply zero focus on it. Most people who choose this path simply hope for an organic solution to present itself, and in nearly every case, they're seriously disappointed when that solution doesn't show up. Even in the off chance that a cash flow challenge does rectify itself organically somehow, do you really want to run your business on blind luck? Avoiding these challenges can hamstring you in the future as well, because you gain no practical knowledge or experience in the right path to take when facing cash flow issues.

Alternatively, if you focus on the issue and address it, you build on your experience and will be less likely to either panic or avoid similar issues in the future. You'll be better prepared.

We've been in some financially challenging positions ourselves. In fact, we've been in the most challenging position you can find yourself in. Years ago, when the real estate market went belly-up in South Florida, we lost everything and had to declare bankruptcy. But through a dedicated focus on finance and cash flow, as well as other core principles we teach and apply in our businesses today, we were able to bootstrap ourselves back into solvency (and far beyond) to become the successful business we are today.

Here's a glimpse of the plan that we used to not only get ourselves back on our feet, but to consistently increase our cash flow coming in the door.

1. Determine how much money you need to spend, then don't spend a penny more. Keep in mind that a need is different than a want. There are a lot of nice-to-haves in business, but not so many need-to-haves. Determine what those need-to-haves are, then go through your expenses and cut those that don't align. Don't be afraid to cut expenses--you can always add them again later if you feel you really need them. Trimming unnecessary expenses goes a long way toward freeing up cash for your organization.

2. Focus on cash-generating activities. Hopefully, you have a good idea of what's actually bringing cash in to your organization. If you don't take some time to identify those activities. Then, focus on increasing or improving them. Remove buyer impediments. Offer discounts and promotions to get more cash coming in immediately.

3. Be sure you're making a commitment to the future. Take a look at your lead generation activities and make improvements where you see challenges. Find out who your biggest advocates are and proactively reach out to them to find out what you can do better and to help spread the word.

It's important to be deliberate and intentional in your focus on cash flow. Sometimes, however, it's just as important to remember all of the assets you have that aren't monetary. Think about you ability and experience, your advocates, you client list, your partners--each of these things (and more which we haven't named) are incredible assets that you can leverage and should acknowledge even if you don't have as much cash flow coming in. It's critical to stay positive in challenging times, and there are few times more challenging than when you're running short of cash.

Don't avoid or be consumed by money issues: instead, focus on the positive. @thecharfens @HuffPostBiz

When we went through our bankruptcy years ago, we were terrified. The last thing we wanted to do was go through the mound of bills before us and try to figure out how we were going to bring in money again. But we did. Perhaps the most important thing we did, however, was a simple exercise that Cadey made sure we completed every day. In the depths of one of the most difficult time of our lives, she made sure we told each other at least three things we were thankful for, each day. Doing so made sure we focused on the positives. It let us know that while we may have not had any money at the time, we were rich in so many other assets.

Facing money challenges can be daunting. But by focusing on the issue and not obsessing, and making sure you maintain a positive perspective, even the worst challenges can turn into the greatest of opportunities.

Alex & Cadey Charfen are the Co-Founders of the Charfen Institute.