Freelance Home-Based Small Business How to Master the Financial Side of Your Business

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How to Master the Financial Side of Your Business

by Philip Campbell

I conducted a survey recently to determine the degree to which small business owners have their cash flow under control.

The survey results showed that only 20% of business owners feel like they have the cash flow of their business under control. That means 8 out of every 10 business owners are trying to manage their business without having the financial side of their business under control.

That's a recipe for disaster! It's like riding along on the freeway in a driving rainstorm and you discover that your windshield wipers won't work. You can't see the cars in front of you or behind you. You slow down to a crawl. You're just hoping and praying the rain stops before you end up in a terrible accident.

In business, you need a clear view into the financial impact of your business decisions so that you put the odds of success in your favor. You have to take control of this part of your business... or it will take control of you.

THE SMALL BUSINESS FINANCIAL DILEMMA

The results of the survey highlight what I call The Small Business Financial Dilemma.

It works like this.

As a small business owner you wear lots of hats. You are in charge of Marketing, Operations, Customer Service, Accounting, Finance, Administration, Human Resources and everything else that must be done to run a successful business.

After a while, some of the work that needs to be done is put off. Often times it's the accounting and financial component of the business that is sacrificed.

A little time passes and you begin to notice you don't really know what's going on with the cash balance. You may be looking at financial statements, but you are confused about what they are telling you about what's going on with your cash balance.

THE RESULTING DILEMMA

Running a small business means you are always making financial decisions and financial commitments. You are making those financial commitments each day and in the back of your mind you are asking yourself these questions:

"Can I really meet these financial commitments I'm making?"

"Am I going to have enough cash to run my business properly?"

Slowly but surely, worry and uncertainty about your cash begins to drag you down. You find yourself spending more and more of your time fighting cash flow fires rather than growing your business and taking care of customers.

THE SOLUTION TO THE PROBLEM

The secret to taking control of your cash flow is to ask yourself two simple questions.

- What is my cash balance right now?

- What do I expect my cash balance to be six months from now?

If you CAN'T answer these two questions, then strap yourself in for a wild ride. You are on a roller coaster ride that's about to become really frightening.

On the other hand, when you CAN answer these two questions, you have just regained control of the financial side of your business. You will experience the almost magical feeling of control that comes from mastering this critical part of your business.

You will feel like I did back in 1991 when I first discovered the secret to taking control of the cash flow of any business. I was amazed how simple the solution was and how it transformed the way I managed the business from that point forward.

NEVER RUN OUT OF CASH

Remember, it's all about the cash. If the cash ever runs out, then everything you worked so hard for goes right down the toilet. That's why the financial side of business is so crucial to your success.

Take the time to ask and answer the two critical cash flow questions each month.

By taking control of your cash flow, you are putting the odds of success in your favor. You are doing your part to avoid becoming a small business failure statistic.

You are making sure you have the financial information you need so you Never Run Out of Cash.

Philip Campbell is a CPA, the Founder of http://www.growandsucceed.com, and the author of the book: "NEVER RUN OUT OF CASH, 2 Questions That Will Eliminate Your Cash Flow Worries". Philip has helped hundreds of business owners take control of their cash flow. Get FREE tips and strategies for regaining control of the financial side of your business at http://www.growandsucceed.com.