Diving into a business without a full understanding of your financial objective is a death sentence. Cash flow management is often overlooked and misunderstood. Yet achieving positive cash flow should be your #1 objective to make your business a success.- Calculate your breakeven point – How much sales will it take for you to pay for your monthly expenses? Calculate that number and set weekly and monthly sales goals to reach breakeven.
- Stay current on loan payments and communicate with investors – Staying current on loan payments help to build good credit and makes for happy investors. Communicate often with your financial backers so they’ll feel confident their investment is a wise one. They’ll also be more inclined to keep investing in your ideas if you are current and good at keeping them informed.
- Get a credit card merchant account – This allows you to operate alongside big business. Most people have moved away from using cash to pay for their purchases. Having a credit card merchant account allows you to accept their business.
- Buy wholesale, not retail – Buying wholesale gives you flexibility with your pricing ultimately allowing you to be more competitive.
- Generate accurate monthly profit and loss statements – An accurate P&L statement is a healthy snapshot of your business’ financial success. Using accounting software like QuickBooks will help you get accurate results.
- Inventory control systems – There’s nothing more discouraging than having too much of a product or being out of product with customers waiting. Using an inventory control system will tell you when you are running low and should place your next order to be just-in-time. It can also estimate how long it will take to sell your overstocked products. Making good use of this system will save you cash and many headaches.
- Accounts Receivable Management - You need complete management of billing and collections. What are your policies and procedures for collecting overdue bills? How will you invoice clients? When are payments due? Should you enforce a penalty on overdue payments?
- Get professional help – No matter the size of your business, there are many affordable accounting professionals that specialize in small business clients and are prepared to meet your needs. Their fees are reasonable and their experience can not be overlooked. They will save you time and money in ways that are difficult for new entrepreneurs to understand. Trust me on this one, please!
Regardless of the size of your business, to generate positive cash flow, you must secure an expert to help you save money and protect your investment. After all, isn’t making money a great reason to be in business?
