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When Income Comes In Spurts
Rhonda Abrams At Gannett News Service:
Every entrepreneur I know wants to make more money. But surviving in business is not only about how much money you make, but when you make it and when you spend it. In other words, “cash flow.” If you can’t control your cash flow, you can’t control your company.
One of my very first clients was a successful floral shop. The problem was, most of the money came two times a year: Christmas holidays and June weddings.
Twice a year, the two partners felt rich, and they spent a lot.
But every year – between February and May, and again from about August to October – they had to scramble to pay their bills.
Bad cash flow management did them in.
You have to plan:
1. Recognize the lag between outgo and income. No matter what your business is, you have to pay money out before customers pay you.
2. Draw up a cash flow projection.
3. Watch your inventory. Inventory is just money sitting around in a different form.
4. Manage growth.
5. Get a line of credit from a bank or lending institution.
Photo by mconnors.
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