Date: August 27, 2020
We’ve all heard “Cash is King”, right? Why is that?
It’s because cash flow is the lifeblood of a business and if there isn’t cash flow (in and out) then the business is doomed. You lose leverage – you can’t build a team, invest in the business, or start new product offerings without enough cash flow. Worse, if something unexpected happens (*cough, cough* COVID) it could mean the difference of closing your doors forever or taking advantage of the available opportunities and scaling.
More and more we are seeing the US economy shift toward a cashless future. That doesn’t mean the concept has changed though.
Whether it’s digital numbers in your bank account or physical dollar bills, your business NEEDS cash flow. It needs to have at least 3 months (preferably 6 months) worth of operating expenses at all times.
By saving from every deposit, investing strategically in your infrastructure, and knowing your numbers.
Even if it is only 5% – save SOMETHING from every sale you make – incremental savings add up, but only if you DON’T SPEND IT!
Don’t hire, invest in large expenditures, or increase spending all willy-nilly. Run the figures, make sure you don’t bite off than your business can chew.
This brings me to KNOWING YOUR NUMBERS – do you have a cash flow forecast? Can you estimate your average monthly expenditures in each major category? Knowing your current financial situation and having the ability to run scenarios BEFORE you send cash out the door is imperative.
If cash flow is a challenge for you, or you don’t ‘know your numbers’, we’d be honored to help.