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Cash Flow Management: Critical For Small Business Success

Running a business places many demands on you.  It’s often tough to decide what your top priorities should be.  But one thing should always rank at the top of your list and that’s your cash flow.  Are you managing your business in these difficult times based on your company’s cash flow?

Think about it this way — there is one thing that you can’t do without in business and that’s cash.  Cash is king.  Your business needs cash for such things are buying inventory, funding payroll, paying office rent and funding marketing efforts.   It’s critical to carefully analyze exactly how much cash your business needs every month in order to stay afloat.  I’m always amazed at how many business owners don’t understand their monthly cash needs.

Make sure you pay particular attention to The Cash Flow Statement which tracks the movement of cash through your business over a specific period of time.  It displays the cash on hand at the start of a period plus the cash received minus the cash spent, leaving  the cash on hand at the end of the period.

In these tough economic times, get to know your Cash Flow Statement inside out, forward and backward and use it to make critical decisions about your business. Buy now?  Wait until next month?  Maybe next year?  The right data can prevent you from burdening your business with significant debt which could result in your business failure.

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