True entrepreneurs always have the ability to make a living, but that doesn’t mean they know the true concept of cash flow. Rather than realize that cash flow ensures delivery of next month’s work, the CEO buys a new truck. There are other examples – the list goes on and on.
In defense of all entrepreneurial CEOs, their job to produce, deliver and collect can be overwhelming. Unfortunately too many CEOs will go get a line of credit and now owe the bank – in addition to everyone else.
All About Cash Flow
Nobody really knows all the elusive expenses of a business: maintenance, building, insurance, taxes, machinery, employees, legal costs, overtime, quarterly taxes, bookkeeping charges, CPA costs, etc. New companies rarely can budget for start up and continuing expenses without some education and discipline. Without guidance CEOs rarely make it past a couple of years. I can help you formulate a cash flow plan that will keep you on top of your finances everyday.
Follow The Rules
If you are serious about making money you have to be serious about your cash flow. Follow these simple rules:
1) No matter what stay inside of your existing cash flow. Loans are reserved for very specific needs, such as equipment. They are not for payroll nor are they for overheads.
2) Forget about expensive vacations. Time away with the family is important and can be done over a long weekend. It doesn’t have to be extravagant. Stay humble and grateful.
3) Avoid legal battles. Always communicate, negotiate and settle quietly.
There is an equation that we use each and every day to track cash flow. We refer to that equation as “critical profit.”