Running a business is akin to that circus act where the performer runs around madly trying to keep all the plates spinning on top of their respective sticks. One ill-timed moment of hesitation or inattention, the plates can all come crashing to the ground.
Things can start falling apart in your business as well, when you don’t plan for those routine purchases regularly required to keep your plates spinning, figuratively speaking, orders of supplies and equipment that are made every few months. One instance of negligence that sees you caught short financially could mean it’s your livelihood in pieces instead.
Start planning ahead for the next order now. If the order is $20,000 every 4 months, for instance, then you will need $5000 from your revenue for purchases each month going forward to always have the funds in place to pay for the next order.
Start a separate bank account for major purchases and transfer this amount each month. Don’t give in to the temptation to use this cash for those little emergencies.
This can also be a great way to plan ahead for those larger capital expenditures, vehicles, equipment or tools. With ready funds on hand, now you’re in a position to negotiate a discount in return for using cash instead of credit. Successful cash flow management is crucial to any and every business.
As Chris Chocola said, "Balance sheets and income statements are fiction, cash flow is reality.”
So I say , Let’s get Real!
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