3 Cardinal Rules of Effective Cash Flow

Posted by John Zerella on 28-Feb-2018 10:39:28
John Zerella
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Blog post from our friends at BIAS Australia

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Did you know that two thirds of all small businesses fail in the first three years of operations? (ABS, 2017) It’s a sad statistic, and time and again I have business owners coming to me telling me that the Achilles heel of their business is their cash flow. The problem doesn’t always lie within a lack of it, effective cash flow management is something that can make or break your small business. Here are my three cardinal rules for just that:

Don’t manage cash flow from the bank balance
This almost goes without saying, but you’d be shocked at how many times I see business owners looking at their bank balance as an indicator of their current position. I cannot stress enough, your bank balance IS NOT AN INDICATOR of how you are tracking financially. You should reconcile from your bank balance, and use you cash balance as your indicator for your current business position.

Know your 6 month balance 
What do you expect your cash balance to be six months from now? This one question will transform the way you manage your business and understand your net position. 
This question really gets to the heart of whether you are managing your business or whether your business is managing you.

Planning is king
Planning your cashflow and understanding you future cash flow position is key to making smart and profitable business decisions. Running your business without a comprehensive cash flow plan is near-guaranteed to cause you problems later down the track. 

If you want to hear my comprehensive 5 step process for bulletproofing YOUR small business, and say goodbye to your cashflow worries – come along to our seminar, ‘Ready. Set. Grow! 2.0’. The follow up to last year’s sell out, we delve into how you can stop burning the candle at both ends, and get your business to where you where you want it to be. 

Ticket available now. Get them here!

 

The Cashflow Handbook