Smoothing out cash flow is a huge issue for most small businesses. And if your business is seasonal, that makes it even harder. The same holds true for many service oriented businesses.
If this is the case for you as it is with this entrant in the AllBusiness.com Big Business Contest, you must take action to do what it takes to ensure you have enough cash on hand in your business to survive the lean times.
First and foremost, you must forecast and track your cash inflows and outflows. Knowing where you might fall short of cash helps you be proactive and address the issue before it becomes critical. The best way to do that is with a cash flow budget. Your best bet is to plan your budget on a twelve month basis so you have plenty of time to react and correct any shortfalls before they occur. Get a free cash flow budget worksheet here.
Once you’ve discovered where your shortfalls exist, brainstorm the actions needed to fix the situation. For a seasonal business, that might mean branching out into a related service that compliments your core services or placing your customers on a twelve month billing cycle to ensure you have cash every month. The worse thing you can do is know about the situation and never take any action.
So start today by sitting down and creating your cash flow budget so you have a clear picture of your business situation. Then brainstorm solutions and create an action plan to make them a reality for your business. And if you need additonal help, pick up a copy of my book “Small Business Cash Flow” at any of the major bookstores or online at amazon.com and other book sellers.
What do you think? How do you control the ebb and flow of cash in your business? Leave me a comment.