There are so many moving parts and issues to deal with on a daily basis as a business owner. You have insurance, inventory, clients, employees, and situations that constantly need your attention. It can feel overwhelming at times and you may not know what to deal with first some days. I will tell you there is one factor over all others that needs your attention every day – cash flow.
You are the heart and soul of your business but cash is the blood that keeps your company alive. Without cash you will suffocate in debt, or choke on the inability to provide service or products, faster than you can imagine. Every day you need to look at where your money is, and where you anticipate it being tomorrow and the next day or the next week. Always know where it is coming from and where it is going to on a daily basis. To quote Grant Cardone – wake up every day and say “Who’s got my money”!
As the owner of a professional services company I have the luxury of not having to deal with inventory. We basically sell time and expertise to our clients so I don’t need to schedule and purchase product, pay vendors, or carry inventory on my books. Cash flow is still the most important thing for me to consider on a daily basis. Having to deal with ordering and managing inventory only compounds the cash flow problem exponentially. Speaking with other business owners who do deal with inventory has shown me that cash flow is even more important for them to manage. They need to have not only the employees, but also the products necessary to run their business.
Nothing will bring a thriving business to a screeching halt faster than running out of cash. You may have 50 clients screaming at you to install your product at the same time you have 50 clients owing you money for installing all the product you had in stock. Without cash to replenish your stock you are out of business. Those clients wanting your product will go elsewhere because you can’t deliver and service them. If you do not have to deal with inventory you will also come to a grinding stop if you can’t make payroll to keep your employees or pay the rent on your office. Employees don’t care if your clients owe you a million bucks – they have families to feed on Friday and the landlord wants the rent.
If I have one piece of advice for any person starting a business, regardless of what the business does, it is know your cash flow. If you want to be successful you need cash at all times. If you have good credit go get a line of credit and use it to help manage the cash flow. If you are just starting out and have no credit, make sure you start creating your own line of credit by saving a small amount of your net profits each week. This will allow you to build up a cash pile to finance your daily operations.
Whether you are starting your business, or been in business a while, always think of your cash flow – every day. Check it once a day to make sure some “hole” in your cash flow is not creeping up on you that is going to put you in a really bad place. Doing this will greatly enhance your chances of success – not doing this will inevitably be the demise of your company.