Small business owners can relieve a lot of their own cash flow problems, according to Caroline Jordan, small business advisor and author. Small business owners have more control over their cash flow than they realize. says Jordan. To help you get a jumpstart on solving your own cash flow woes, Jordan offers a free, Cash Flow Master checklist that you can get by sending a blank email to TheJordanResult-110571@autocontactor.com. Jordan also suggests the following tips to help you understand why cash flow problems plague 66% of small businesses. 1. Avoid the dreaded Fly by the Seat of Your Pants accounting method.--Businesses need to systematically track income, expenses, accounts receivable, and accounts payable. If you only know how your business is doing once a year at tax time, youre bound to end up deeply mired in the Cash Flow Swamp. 2. Developing Strength in NumbersOnce you have your accounting system in place you need to learn what the numbers are telling you and how to use those numbers to manage and grow your business. 3. Keep tight control of creditBusiness owners can get themselves in credit trouble two different ways; poor credit granting practices and shortsighted use of credit from banks, credit cards, and vendors. 4. Be sure your Receivables and Payables play nice togetherThe money owed to you by your customers should arrive in time for you to pay your vendors and your employees. When your customers take 60 days to pay and your vendors want to be paid in 30 days, you can quickly end up with a Cash Flow Crunch. 5. Make decisions based on Cash Flow not ProfitMany businesses that fail are profitable when the doors close. What those businesses dont have is CASH. When you pursue that big, juicy contract or think about hiring another employee, always ask yourself What will this do to my cash flow? 6. Dont forget your debt to society Some bills are easy to forget. Bills like sales tax, payroll taxes, and estimated taxes. Ignoring them doesnt make them go away. Planning ahead makes the bite easier to take and keeps your from suffering Tax Day sticker shock. Scrambling to find money for taxes causes major cash flow problems. 7. Dont spend your companys future on a speed boatEverybody loves toys. Dont make the mistake of thinking all the profits of your business are fun money. Youve heard it many times from personal financial planners that you should have enough cash put aside for six months of expenses. This is true for your business, too. Sales ebb and flow. Expenses rise. Customers leave. Vehicles break down. Computers fry. The number one rule of small business is Stuff Happens. Having a reserve of cash keeps your cash flow from tanking every time a new challenge appears. |
