I'm currently reading "The Small Business Survival Guide" by Robert E. Fleury and recommend it for a veteran business owner or future entrepreneur wanting to know why businesses succeed and fail.
He makes a compelling statement worth heeding: "The vast majority of business failures stem from a single cause, poor cash management. So if you can find a fast and simple way to properly manage cash, you have a much better chance of beating the odds."
In the guide, Fleury has a chapter dedicated to No Entry Accounting. I'll be reading it with interest and gleaning as much as possible.
A couple of years back, I interviewed an accountant who gave five helpful tips that help run a small business. One tip was spending an hour a week on finances to prevent stuffing receipts and things in a shoebox.
Click here to access the article on Examiner.com where I'm the LA Business News Examiner.
I don't always heed her advice but I need to stop for that hour per week since it saves grief farther down the road. Below, I share my four tips for cash management.
Here are a few of my tips for cash management:
#1 Know how much money you have on hand now
#2 Know how much money is projected to come in during the next week, 30 days, 60 days.
#3 Know how much it costs to obtain a client and project how many clients/customers are needed to remain profitable. I'm a writer and I do little to no advertising, yet I do have costs to win clients.
#4 Know your fixed expenses.
This is not comprehensive but it is a step toward more effective cash management, especially for those of us who provide services.