Managing Cash: The Small Business Owner’s Guide to Financial Control
How much money comes into your business and how much goes out is called cash flow. Gaining financial control by understanding cash flow is crucial to your success.
Many people think their business is sound as long as “more money is coming in than going out.” This way of thinking can weaken a business’ short-term stability and its long-term growth.
A certain amount of cash must be on hand at all times for day-to-day operations and to pay expenses on time. But what about the gap that occurs when your bills are due before you collect the cash that’s owed you? What about unexpected expenses, like equipment repair?
Without proper cash flow, even a thriving business can fail. Think of your business as a rope with three intertwined strings. One string is what you sell (your products and services). The other string is what you earn, and the third is what you spend. If one string weakens, it affects the strength of the rope.