Cash Flow is Important!
Looking around at a office full of smiling staff, and receiving a box of chocolates from a happy client can make your day.
Having a great plan and great work-philosophy – We all agree these are important. No argument here.
But if we are responsible for the livelihood of others, we have to be conscious every hour of the day that the only currency that the bank, IRS, landlord, and real, physical world accepts is money.
Companies normally fail because they run out of cash. Keeping track of our cash flow and continually looking for, and implementing ways to improve it keeps our company healthy.
These are a limited number of levers that we have at our disposal to improve cashflow :
- Pricing. Increase (or reduce) the price of our goods and services
- Volume. Increase the quantity of what we sell
- Cost of Sale. We can reduce the cost of what we sell
- Operating costs. We can reduce our operating costs
- Collecting money. We can ask our customers to pay earlier and have a means of ensuring they do so.
- Paying later. We can extend the time we take to pay our bills
- Inventory. We can reduce our inventory.
It is better to proactively manage these items rather than finding ourselves in a position where we have to manage them to save our business.
Some of my clients posts these on a wall in their office to keep them in mind.
The next section the the Section Summary.
NLP Going Solo 1: Start with the end in mind
NLP Going Solo 2: Balanced Scorecard
NLP Going Solo 3: Customer Proposition
NLP Going Solo 4: Your Brand
NLP Going Solo 5: Choosing Customers
NLP Going Solo 6: Reaching Customers
NLP Going Solo 7: Cash Flow
NLP Going Solo 8: Summary