Managing your cash / blocking & tackling

Many of us are excited that the football season is upon us. In football, blocking and tackling are fundamentals and if not executed correctly will cost you the game.

In business, especially in lean times, it’s easy to get distracted and forget basic business fundamentals. So, it may be a good time to be reminded of three of the most important fundamentals to keep in the forefront of your mind.

(1) Cash Is King. Manage it with the attention it deserves.

Cash is what keeps your business alive. Without cash, you have no business. Make sure you have a current statement of cash flows. This is perhaps the most important report a business owner needs to run the company.

(2) Never run out of cash. Make the commitment to do what it takes so that it does not happen to you.

Knowing your bank balance is interesting. Having a current and accurate “book” balance from the accounting system is imperative. Relying on the up to date accounting system cash balance, which must be periodically reconciled to the bank balance, will allow you to avoid serious and expensive mistakes.

(3) You absolutely, positively must have cash flow projections.

Cash flow projections are the key to making wise and profitable business decisions. It’s impossible to run your business properly without them. The finance or accounting staff must establish a process to create realistic cash flow forecasts in order to understand where the cash will be during the next 13 to 26 weeks. The cash forecast must be reviewed at least weekly. Establishing cash flow projections is rather easily accomplished using a few basic principles coupled with your intuition and knowledge of the business. Adjust for any significant changes you expect to happen that are different from the past period and never project revenues that you cannot be fairly certain will occur.

Understanding the company’s cash flow will give you peace of mind and help you take control of the financial side of your business. In addition, it will provide your team with the information needed to run the business effectively.

As a business owner, you need to free yourself to focus your unique talents and abilities on growing your business rather than fighting the constant cash crunch fires. Eliminate your cash flow worries so you are free to do what you do best – be the visionary, lead, take care of customers and make more money.

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