I conducted a survey recently to determine the degree to which small
business owners have their cash flow under control.
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The survey results showed that only 20% of business owners feel like they
have the cash flow of their business under control. That means 8 out of
every 10 business owners are trying to manage their business without having
the financial side of their business under control.
That's a recipe for disaster!
It's like riding along on the freeway in a driving rainstorm and you
discover that your windshield wipers won't work. You can't see the cars in
front of you or behind you. You slow down to a crawl. You're just hoping and
praying the rain stops before you end up in a terrible accident.
In business, you need a clear view into the financial impact of your
business decisions so that you put the odds of success in your favor. You
have to take control of this part of your business... or it will take
control of you.
The Small
Business Financial Dilemma
The results of the survey highlight what I call The Small Business
Financial Dilemma.
It works like this.
As a small business owner you wear lots of hats. You are in charge of
Marketing, Operations, Customer Service, Accounting, Finance,
Administration, Human Resources and everything else that must be done to run
a successful business.
After a while, some of the work that needs to be done is put off. Often
times it's the accounting and financial component of the business that is
sacrificed.
A little time passes and you begin to notice you don't really know what's
going on with the cash balance. You may be looking at financial statements,
but you are confused about what they are telling you about what's going on
with your cash balance.
The Resulting
Dilemma
Running a small business means you are always making financial decisions
and financial commitments. You are making those financial commitments each
day and in the back of your mind you are asking yourself these questions:
"Can I really meet these financial commitments I'm making?"
"Am I going to have enough cash to run my business properly?"
Slowly but surely, worry and uncertainty about your cash begins to drag
you down. You find yourself spending more and more of your time fighting
cash flow fires rather than growing your business and taking care of
customers.
The Solution to
the Problem
The secret to taking control of your cash flow is to ask yourself two
simple questions.
- What is my cash balance right now?
- What do I expect my cash balance to be six months from now?
If you CAN'T answer these two questions, then strap yourself in for a
wild ride. You are on a roller coaster ride that's about to become really
frightening.
On the other hand, when you CAN answer these two questions, you have just
regained control of the financial side of your business. You will experience
the almost magical feeling of control that comes from mastering this
critical part of your business.
You will feel like I did back in 1991 when I first discovered the secret
to taking control of the cash flow of any business. I was amazed how simple
the solution was and how it transformed the way I managed the business from
that point forward.
Never Run Out
of Cash
Remember, it's all about the cash. If the cash ever runs out, then
everything you worked so hard for goes right down the toilet. That's why the
financial side of business is so crucial to your success.
Take the time to ask and answer the two critical cash flow questions each
month.
By taking control of your cash flow, you are putting the odds of success
in your favor. You are doing your part to avoid becoming a small business
failure statistic.
You are making sure you have the financial information you need so you
Never Run Out of Cash.
-- Philip Campbell is a CPA and
the author of the book: "NEVER RUN OUT OF CASH, 2 Questions That Will
Eliminate Your Cash Flow Worries". Get your copy of his FREE Special
Report "The Secret to Creating Cash Flow Projections You Can
Trust" at http://www.growandsucceed.com
.
October 14, 2003
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