Every small business owner knows the trouble that comes with managing the ins and outs (pun intended) of cash flow. You can have tons of loyal customers and be an expert at getting new business and still be kept awake at night with cash flow worries. Cash flow management is an issue that can send good businesses, large and small, to their graves.
Cash flow problems have a habit of sneaking up on a business, especially in an uncertain economy. If a business is earning a profit, many business managers simply assume that cash flow is satisfactory. But even if profit is good, cash flow can be bad.
Cash flows pose an unending challenge to business owners and managers because they have to be carefully managed. Read on to learn what you can do to make 2012 the year of the cash flow reboot for your business.
Respect and understand financial statements. According to some surveys, 25% of businesses don’t even maintain accounting records (let alone produce financial statements). The bottom line for small business owners is simple: If you don’t make an effort to prepare, review, and completely understand your financial statements, then you need to ask yourself why you’re in business in the first place. And this especially holds true for the statement of cash flows, because an abundance of invaluable information is available from this most commonly overlooked and mismanaged financial statement.
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