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Working Cash Flow Management to keep your Startup Afloat

By Edited Oct 21, 2015 0 0

If you run a small business, chances are that cash flow management is on the top of your mind all the time. And that would be for good reason too - studies show that at least one out of two businesses fail because small business managers often find it difficult or impossible to keep on top of the cash flow. At one point or another, their expenses run over the income coming in, and everything crashes and burns. About the first thing you need to do when you consider starting your own small business is, to think about how to do well with cash flow management. The techniques you'll need to achieve this are simple, as we'll see. It just takes regular dedicated work at it keeping your accounts balanced, to make sure that the cash flow never runs the other way.

You are in business to be able to move product out the door. To do that, you'll need to establish sales targets and meet them. Many businesses get into trouble occupying themselves with the niceties of establishing a marketing plan or an accounting plan, and just forget that a new business absolutely needs to meet its sales targets o even stay in business. You need a sales staff with great skill in closing. It's important that a business stop relying on its capital, investments and borrowings to stay afloat. You need to let you business stand on its own feet before long.

Moving enough product out the door though doesn't mean you need to ignore the part of the business that deals with keeping accounts. Lots of businesses fail, because they are so glad for whatever business they get, they simply don't keep on top of all the invoicing and collecting they need to do. Just remember, that you need to look at the businesses that supply you with material to learn how to keep on top of your invoices. Just as your creditors never let an invoice go unpaid, you need to make sure that all invoices are properly paid too. It's easy to try to win your customers over by offering easy credit terms; but it can be a terrible idea for a new business that doesn't really know its customers well. A sale that isn't collected on is only a burden on your business, and it's terrible cash flow management.

Keeping a tight rein on your cash flow management means putting money where it counts and nowhere else. Lots of businesses go under splurging on the inessentials - on fancy offices, great office equipment and the like. You need to keep your overheads down to a minimum. Aggressive cost-cutting isn't just for the big businesses, you know.

You've heard about how Wal-Mart and Dell keep their costs down by keeping inventory down to maybe a few hours worth of stuff. If it's good for them, it should be good enough for you. The less inventory have, the more dollars and cents the have to apply to growing your business. There isn't any one area that magically sports cash flow problems out for company. It's all about applying common sense, and aggressively doing the right thing for your business.



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