Chances are, you didn’t start your business to manage money. But if you’re like many other business owners, you probably find yourself doing this regularly.
Why is This?
The reasons for this vary by business, the time of the year, the type of markets, and so on. But other businesses problems aren’t your problem. So there’s only one question you need answer: why is your business having cash issues?
The Best Source of Cash
If juggling cash flow is only an occasional problem for you, that’s great! Do you know if it will stay that way? If the tussle with your checkbook is more frequent, then do you know why?
The cheapest, most accessible form of capital for your company are the profits you generate. There’s no application to complete, no bankers to meet with, no interest, and no payment schedule. If this kind of cash flow is attractive to you, the next most relevant question is whether you are getting the most cash out of your company’s operations.
Where to Find The Information
Answers to these crucial questions starts with your “books.” Making sure your checking account is accurate is absolutely necessary. But so is knowing how much cash will come in today, tomorrow, next week, etc. The same is true for the cash you need to pay out.
So, you see, unless your books have the information to provide this insight, you’re just guessing. And from where I come from, that’s not a solid business plan.
Some questions to ask yourself: How many of what you sell does it take to break even? How many do you need to sell to meet your payroll? Your growth goals? Your retirement? If you don’t have answers, you have some work to do!
Here’s some tips from the National Federation of Independent Businesses.https://www.nfib.com/content/resources/money/4-tips-to-improve-your-small-business-profitability/
Here’s a story about one of my clients. First – the set up: They are a service business, they sell no inventory. Most of their wages are salaried. Working with them, we found out which three service lines were generating the most margin. For their business and their pay structure, this meant finding out which service had the highest value to their customers with the lowest salary.
The outcome was what they hoped for – a 10% increase in margin, 10% more in their pocket for every dollar of revenue.
Where is your 10% going to come from? https://steveshamrock.com/services/