Money is the blood line of any business. It is a fact that over 90% of businesses go out of business within the first year and the reason is inadequate cash flow. Go figure! So what are the pitfalls to avoid and measures to take? Have a look below:-
1. Never run out of cash
Failure in business is simply running out of cash. Make sure this doesnt happen to you by keeping extra reserves locked away for down periods.
2. Cash is King
Remember what you are in business for (to make money) and respect that fact by giving it the care and attention it deserves. For if you dont it will return the favor.
3. Know your Cash Position
Too many people make wrong decisions because of the fact that they dont know the facts of their business. Dont let this happen to you. You must know exactly what you have in the bank at this very moment to ensure you make well informed decisions.
4. Complete Todays Work TODAY
The only way to keep an up to date information system regarding your cash flow is to ensure that todays work gets done today. Otherwise you will be making decisions on historical data, which is also incomplete.
5. Do it or Delegate it
The only way to make sure work gets done is either to do it yourself or to make sure that you get some one else to do it. Either way, make sure that what needs to be done, is being done by some one.
6. Bank is not equal to Cash
Your heading for big trouble if your managing from your bank balance. Cash balance is not the same as bank balance which may have uncleared checks, pending transactions and a host of other things.
7. Look 6 months in to the Future
You should know what your cash balance is likely to be 6 months in to the future. That given you are well on your way to understanding the health of your business. Therefore, if ever down, you will have plenty of notice to correct it before it is too late.
8. Projections are a Must
Cash flow problems dont just happen. They are reached slowly and the signs are always there if some one is looking carefully. So make sure you are looking at the signs so you are prepared well in time.
9. Eliminate Concern
If you are always worrying about your cash flow then you are not concentrating on your business as much as you should. Make sure to eliminate all cash flow worries and focus your time on growing your business.