The 10 Cash Flow Rules You Can't Afford to Ignore

Oct 2
21:00

2003

Philip Campbell

Philip Campbell

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The statistics on small business failure are alarming.

Michael Gerber,The 10 Cash Flow Rules You Can't Afford to Ignore Articles author of "The E-Myth: Why Most Small
Businesses Don't Work and What To Do About It", says that
40% of businesses fail in their first year. 80% fail within
their first five years.

THEY RAN OUT OF CASH.

Don't let this happen to you.

Here are 10 Rules to help you take control of your cash flow
so you can create the business you have always dreamed of.


1. Never Run Out of Cash.

Running out of cash is the definition of failure in
business. Make the commitment to do what it takes so it does
not happen to you.

2. Cash Is King

It's important to recognize that cash is what keeps your
business alive. Manage it with the care and attention it
deserves. It's very unforgiving if you don't.

Remember, Cash Is King, because No Cash = No Business.

3. Know the Cash Balance Right Now.

What is your cash balance right now? It's absolutely
critical that you know exactly what your cash balance is.

Even the most intelligent and experienced person will fail
if they are making business decisions using inaccurate or
incomplete cash balances. That's the reason why business
failures are not limited to amateurs or people new to the
business world.

4. Do Today's Work Today.

The key to keeping an accurate cash balance in your
accounting system is to do today's work today. When you do
this, you will have the numbers you need - when you need
them.

5. Either You Do the Work or Have Someone Else Do It.

Here is a simple rule to follow to make sure you have an
accurate cash balance on your books. You do the work or have
someone else do it.

Those are the only two choices you have. The work must be
done. It's like mowing the lawn. You can't just ignore it.
Someone has to do it. That means either you do it or you
have someone else do it.

6. Don't Manage From the Bank Balance.

The bank balance and the cash balance are two different
animals. Rarely will the two ever be the same. Don't make
the mistake of confusing them.

It's futile (and frustrating) to attempt to manage your cash
flow using the bank balance. It's a prescription for
failure. You reconcile your bank balance. You don't manage
from it.

7. Know What You Expect the Cash Balance to be Six Months
From Now.

What do you expect your cash balance to be six months from
now? This one question will transform the way you manage
your business.

This question really gets to the heart of whether you are
managing your business or whether your business is managing
you.

8. Cash Flow Problems Don't "Just Happen".

You would be shocked and amazed at the number of businesses
that fail because the owner did not see a cash flow problem
in time to do something about it.

The key is to always be able to answer the question - what
do I expect my cash balance to be six months from now?

9. You Absolutely, Positively Must Have Cash Flow
Projections.

Cash flow projections are the key to making wise and
profitable business decisions. They give you the answer to
the all-important question from Rule # 7.

It's impossible to run your business properly without them.

10. Eliminate Your Cash Flow Worries So You Are Free to Do
What You Do Best - Take Care of Customers and Make More
Money.

Use these 10 Rules to free yourself from cash flow worries.
That way you can focus all your time and talents where you
can make the most difference in your business.

No more wasted time worrying about what's going on with your
cash flow. Instead, you can focus your unique talents and
abilities each day on ways to grow your business and
make more and more money each year.

And that's a recipe for success and wealth creation.