|
Poor Folk Marketing.com
|
marketing iedas internet marketing online marketing offline marketing | |
|
Featured Business, Start a Personalized Candy Wrapper Business: Wrapcandy.com |
|
|
| |
| |
| Home | Small Business Information | Pay Per Click Advertising | Affiliate Revenue | Web Promotion | |
|
|
|
Do You Make These 7 Deadly Cash Flow Mistakes?
Managing cash flow is every small business owner's most important function. Avoid these seven deadly mistakes to make sure you aren't creating cash flow problems in your business. 1. Using the "Fly By The Seat of Your Pants" Accounting Method. When tax time rolls around do you find yourself pawing through piles of paper on your desk looking for credit card receipts from your business trip? Or are you upside down digging under the seat of your car trying to figure out where all your gas receipts are? Are you wondering if that coffee stained piece of paper is an invoice from a supplier? Do you have a vague feeling that someone, somewhere owes you money but, you just can't remember who it is? If so, you're probably guilty of operating with the "Fly By the Seat of Your Pants" accounting method. Using this accounting method has a tremendous impact on your business's cash flow. Unless you have a system to track your business finances, you'll always be operating in the dark and in danger of imitating George of the Jungle as he slams into a tree. 2. Not Knowing What the Numbers Are All About. Once you have a real honest to goodness useful accounting system that's where the real fun starts. You've got a bunch of numbers but what in the world do you do with them? Understanding what the numbers mean is crucial to your cash flow. Are sales trending up or down? Are expenses rising faster than sales? Is one product more profitable or better selling than another? How much do I need to sell to meet expenses each month? Can I take a paycheck this month? The answers all lie in the numbers. 3. Mismanaging Credit: I Owe You, You Owe Me. There are two ways to mismanage credit in small business: 1. Granting credit without wise credit policies 2. Using credit with no plan of how to pay the bill. Both have a huge impact on your cash flow and are often closely related. Here's a scenario to demonstrate that point. You have an opportunity to work on a big project but to do the project you need to order materials. So, you order materials from a supplier who expects payment in 30 days but you won't receive cash for the project for 60 days (or 90). Immediately you've put yourself into a cash flow crunch that could take months or years to recover from financially. In the meantime you've passed on smaller jobs that would have provided quicker cash at less cost. And, if you're not able to come up with the cash for your supplier, you've endangered that relationship as well. 4. Ignoring the relationship between Receivables and Payables. Do your Receivables and Payables "play nice" with each other? In a perfect world your receivables (what customers owe you) would be paid just in time for you to pay your payables (what you owe your vendors). But, if you're a small business owner you know Rule #1 is "Stuff Happens". The customer you thought would pay his bill this week, doesn't. So the bills you thought you could pay this week, don't get paid. Are your Payables in balance with you Receivables? If what you owe to others is far more than what is owed to you, then, Houston, you have a problem. And it's not just the balance that's important, it's the quality as well. If your receivables are as old as your Aunt Tilly, chances are good you'll never see the cash. 5. Focusing on profit instead of cash flow. Ahh, Profit. The ultimate goal of every business. Or is it? Did you know that many businesses that fail are operating at a profit? How can that be? For the small business, cash flow is the ultimate goal. No cash flow. No business. Period. What's the difference? Mostly the difference is in the decision making process. "If I take on this big job, it will earn me a huge profit, but if I take on five smaller jobs, I'll have cash to pay my bills." Yes, you want to be profitable but every decision has to be measured against the effect it will have on cash flow. 6. Forgetting your debt to society. Some bills are easy to forget. Bills like sales tax, payroll taxes, estimated taxes. They sort of sit out there, almost off the radar screen. They don't have to be paid right away. It's easy to forget them until BAM! they're due and they're due right now. And you better have the money to pay them or you're in hot water with the Tax Man. That's not a place anyone wants to be. Pay them late or not at all and you end up with penalties and interest on top of what's already due. Cash flow problems result as you rob Peter to pay Paul. It can take months or even years to recover. 7. Spending your company's future on a speed boat. Haven't you always wanted a speed boat? Or a fancy car? Or an all expense paid trip to the Bahamas? It might be tempting to try to pass your personal purchases off as tax deductible business expenses. But, it's a bad idea for two reasons. The folks who work at the IRS are over-worked but they're not stupid. The last thing you need is an audit. An audit that could reveal your transgressions and could result in an unexpected tax bill plus penalties and interest. Again, huge cash flow headache! Here's the other reason it's a bad idea. Are you spending your company's future on frivolous or unnecessary expenses? Small businesses operate close to the edge. Unless you have a reserve to see you through the tough times, you're always in danger of being on the wrong side of that edge. You've got to take care of the golden egg laying goose first. Then, you can pay yourself a properly taxed bonus and buy all the toys you want. Learn cash flow secrets from the Cash Flow Master. Sign up for a free mini course from veteran small business consultant, Caroline Jordan MBA. Visit http://www.TheJordanResult.com/mastering.html and start learning the keys to good cash flow management today.
MORE RESOURCES:
Small-Business - Google News |
|
|
|
RELATED ARTICLES
Environmental Boat Washing and Detailing Some marine biologists feel that the concentration of dead marine growth on boats and in boat harbors can create hypoxic zones or a lack of oxygen. This causes a decline in the water quality and may at times cause adverse effects on living marine life such as salmon in the case of the State of Washington. Restaurant Operators - What Skills do you Need A tongue-in-cheek look at the skills required to operate a restaurant but?on he whole they come pretty close to the truth.People Skills,You need to be good with people, because you will have different customers almost every day, you will have repeat customers who have higher expectations, a high-maintenance shift-based staff to manage, suppliers who won't always meet your expectations or time frames and creditors who want their money now. Why the Over Regulation on the Franchising Model? Franchising is the fastest way to build small businesses, provide jobs, create money flows. Currently the Federal Trade Commission wishes to increase the over regulation on the franchising sector. Reaping the Rewards of Cost Cutting In these days of insecurity and uncertain futures, the tendency is to manage for survival but the smart business leaders are actively hunting for profits.And they are doing this without launching costly new initiatives or major capital investments. Small Business Opportunities And The Tens You may find this Newsletter a little long winded but it's for a good cause: It's all designed for Your Success!One of my favorite quotes is by Alfred d'Souza. It goes like this:"For a long time it had seemed to me that life was about to begin, real life. How to Bond a Business Relationship When should you create a foundation in order to solidify a business relationship?Before you bond any business relationship, you need to make sure that this is a relationship that you both want to have. No relationship is a one way street; the relationship must work in both directions. Do You Love Food? - Then Maybe Opening a Restaurant is Not Such a Crazy Idea The restaurant industry in the United States employs an estimated 12.2 million people, making it the nation's largest employer outside of government agencies. Is It Recess Yet?! Confessions of a Self Employed Workaholic I have a confession to make. My name is Caroline and I'm a workaholic. How Micro Loans Can Mean Macro Success for Your Business "Inch by inch, row by row.. Using Excel Payroll Sheet to Make Payroll System Easier For the employees, payday is the brightest day; they finally get the compensation they so well deserve for the services they rendered. For the employer, this could be nerve-wracking, not because they don't want to pay their employees, but because some employers have a hard time calculating the payroll. Choosing a Truck Wash Location in Nevada, Case Study There are several well-known truck washes in the Great State of Nevada. Truckers need to get their truck washes as they travel West into California after coming off the mountains thru the weather, which dirties their trucks. Detailing Business Options So you want to get into the auto detailing business and are not sure what options are right for you? It is a difficult choice indeed and there are so many options. Let me tell you a few having been in the industry some 27-years, we have seen a lot of businesses come and go and we have seen what works. Setting Prices - Pricing Your Consulting Services THE PSYCHOLOGY OF PRICINGIn case you hadn't noticed, people can react very differently when faced with the same price for a product or service. In fact in most cases, we'll never actually know what is in their minds when they consider a price and then decide to respond to it in certain way. How Small Business And Nonprofits Can Afford Multimedia For The Web Multimedia is everywhere on the Internet, whether in the form of floating ads at major websites, streaming video or animated presentations. Of course, there is a good reason why multimedia has become such an integral part of the web experience: it's an effective tool for capturing attention or provoking visitors to buy or contact the site owner. Awning Cleaning Business Case Study: Entrepreneurship 101 It is most fascinating to study how entrepreneurs spot opportunity in the market place. "My name is Lance Winslow and I am a serial entrepreneur, I admit I am addicted and need help. Work is a Four Letter Word I love work, I can watch it all day.I am not scared of work, I have been known to approach within arm's length of it on a number of occasions. What is Rule 15c211 and Reverse Merger Rule 15C211Under SEC Rule 15C211, a U.S. Job Costing - Do You Know How? What's your job profitability? I meet with business owners every day that are unsure of their profitability at a company or job level. They "think" they are making money because they have a few dollars in their checking account. Bogus Investor and Consumer Complaints and Consumer Misrepresentation Like most regulatory bodies in the United States, the Federal Trade Commission gets investor and consumer complaints. But how much of these are actually real? These agencies then act on such complaints and increase regulations. So What? How to Elicit Benefits from Features "So what?" is a lovely question.It can lead to a punch on the nose if you tactlessly say it to others to challenge their ideas but, when you use it to question your own decisions it has endless uses.
|
| home | site map |
| PoorFolkMarketing © 2007 |
