Small Office, Home Office Information |
| Watching Your Cash Flow Drain Away On a few occasions now Toni and I have written articles about cash flow for small business and we certainly have some planned for this blog because understanding and maintaining a steady flow of cash through your business is vital to your success. Well we were the experts, we know how to maintain cash flow but we missed something. And now it has come back to bite us. The cash flow though Toni’s business, because after all it is her business, is wonderful. Certainly there are some peaks when big orders come in but there is also a steadily increasing amount coming through from small to medium sized orders that are renewed every month. But that’s not the only secret to succeeding. You also need to see where that cash goes once it has flowed into your bank accounts and that is where we fell short. I suppose that when you see a lot of money in your account it’s easy to go out and spend it. If you have been doing with out just to make ends meet then you sometimes feel like rewarding yourself and so you splurge. But we were aware of that; we have been through that ourselves and we know that we always need to monitor our spending. Our problem was different. For some months now our health has been far less than perfect. But that is nothing new; we have both had ongoing problems for almost all the time that we have been together. Usually though, when one is down the other is fine and can take up the slack to cover for the other person but this time we have both been unwell together. That has meant that while our work has been steadily increasing one of us couldn’t cover for the other but then that was ok because we have other writers who can handle the extra work. But it wasn’t ok; sure the work was being done and the cash was flowing into our accounts … and right back out again to our writers. In the part of the industry where we do most of our work margins are very tight and so to survive it’s important that we do as much of the work as we can. With both of us unwell that work was going out to the writers and so was the cash. I’d like to say that we were perhaps too unwell to realise what was happening but that would be an excuse. The fact is that we just didn’t think about it and now we’re learning another important lesson about being in small business. How’s
your cash flow going? Is the dam filling up or is it draining away like
ours was?
18 Sep 2005 |
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