Cash Flow - How Much Fuel is in Your Tank?

According to the Discover Small Business Watch, only 41% of small business owners had reported no cash flow issues at the end of November 2009. That is the lowest percentage reported in this category in the history of the Watch, which means more business owners are struggling with cash flow recently (52%) or are unsure of their situation (6%).

So How's Your Cash Flow?
One of the most crucial pieces of survival and growth of your company is contingent on is amount of cash you have on hand. Understanding how cash flows through your business from inventory through production to delivery and collection is the first order. 

Cash Gap Plan
Even before you find yourself in need of cash, investing time in creating a cash gap plan in the event of a shortfall is time well spent. A gap in cash can happen for many reasons: bills are paid weeks before cash comes in from customers; working capital is needed to keep staff paid; new technology is required to keep abreast of the competition. However, there are ways to improve your cash flow situation that might, in turn, become standard operating procedures to help prevent a deficit in the future.

Budget and Monitor
An operating budget is a key tool to monitor whether your business is financially on track. This should be reviewed continually along with the income statement, balance sheet and the cash-flow statement. According to Wendy Alexander, the director for small business for Capital One Financial, the biggest mistake for business owners is to treat a budget as a one-time exercise, or a once-a-year process, rather than seeing it as a living document to be used to run the business day to day.

Collections
Depending on your business model, one thing to consider is reining in your receivables. It's not uncommon to see receivables lag in a tight economy, however, focusing on keeping receivables low can help you increase your cash flow and working capital. Connect with the customer that hasn't paid and give them a deadline. Incent your customers to pay on time with a discount or percentage off their next purchase. Negotiating extended credit terms to suppliers keeping more money in your pocket. Concentrating efforts on fast moving inventory, and or implement a just-in-time inventory model. And get cash out of customers through discount programs and credit card transactions. 

With a little insight and planning, you can improve your cash flow situation and maybe at the same time upgrade your operating procedure so you will not find yourself on the short end of cash in the future. And the savy entrepreneurs know how to capture market share from their competitors in down economic times, therefore growing their top line as well.

Buffie Blesi is the President and Founder of KnowledgeSphere, Inc. which owns and operates several AdviCoach Business Coaching franchises in Minnesota. She has a strong passion for her clients and their success. As a business owner herself, she understands the traps and unique challenges all owners face and has a coach of her own to keep her on track. 

With 20 years proven success increasing efficiencies, reducing costs and creating strong effective teams, Buffie has a history of growing companies of all sizes– from Fortune 500 to small businesses – to growth and profitability. Over her career, she was fortunate to be a key player in several successful start-up operations including a discount brokerage firm for a large regional bank and creator of a strategic assessments and regulatory practice are for a local consulting firm, holding executive level leadership positions in both including Senior Vice President of Operations, Director and Chief Financial Officer, respectively. 

Her experience is far reaching, with strong knowledge of marketing and sales, operations, accounting and finance, customer service and strategic planning. She has a keen ability to identify areas for improvement and has had a number of successes.

Buffie BlesiAdviCoach Business Coaching
651-815-8398