Learn how to keep your business cash flow healthy.
Let an Online Business Coach show you how. Message one for free today.
If there’s one thing a small business needs to succeed, it’s money. Makes sense, right? Without adequate capital, a business cannot function, grow, or meet its goals. One way to measure a business’s financial health is to think critically about cash flow.
What is cash flow?
Don’t worry—we won’t be getting into the nitty, gritty side of economics. Let’s keep it simple. Cash flow is defined as the total amount of money that goes into and comes out of business. This includes operating costs.
For those of you who like math, let’s put this concept into a basic formula.
Cash Flow = Revenue from Operations – Business Expenses
Therefore, when cash flow is a positive number, it means that a business is making more money than it is spending. That’s the goal!
Why cash flow is important.
Cash flow is, of course, important because a positive cash flow means that a business will be able to grow, invest in its future, and prepare for potential financial challenges. A business that maintains a negative cash flow for too long will quickly find itself deep in debt and, in many cases, will eventually fail altogether.
How to maintain a healthy cash flow.
Even once you understand Cash Flow 101, the cash flow formula, and how to calculate cash flow, it’s another matter entirely to keep your own business’s cash flow healthy. A few tips to keep yourself in the green include:
Cut costs when you’re able.
This may go without saying, but cutting costs in small but consistent ways will eventually lead to big changes in cash flow. As expenditures decrease, your cash flow is likely to remain in the net positives even if you’re not bringing in more money than you were prior to cutting costs.
Run your business responsibly.
While every business owner has a unique, personal management style, there is still the right way to run a business and plenty of wrong ways to run one, too. Stay on top of your finances, stick with a consistent invoicing system, and plan for the future.
Pursue online business coaching.
An Online Business Coach is one of the best resources out there for those of you who are hoping to maintain a positive net cash flow. Business Coaches know the ins and outs of cash flow so that they can act as your guide to keep your cash flow healthy. Plus, they can also help business owners like you to manage cash flow, learn how to calculate operating cash flow, and understand cash flow in a way that is both practical and realistic.
Start now rather than later to get on top of your expenses, and sign up for your first business coaching session to make your business’s success a reality! Browse through our list of Online Business Coaches now and message them for free.