5 CASHFLOW MISTAKES ENTREPRENEURS MUST AVOID AT ALL COSTS!

CLICK HERE TO DOWNLOAD THE PDF FILE

According to the Small Business Association (SBA),

82% of business fail because of poor cash flow.

Holy shit!!! What???

If you started a company to chase your dream, you are most Likely working in an area where you have a high Level of passion. You may have busted your ass to get to where you are, but unfortunately, passion and hustle are not enough. You need different skills if you want to continue to grow and you MUST UNDERSTAND CASH FLOW!!!

For entrepreneurs, managing your cash flow is a critical aspect of running your business. Cash flow is the amount of cash that flows in and out of your business, and it's a key indicator of your company's financial health. Cash flow IS NOT PROFIT & LOSS. You can be profitable and still have shitty cash flow. You can be Losing money but still be in a strong cash position.

Without proper cash flow skills, you will quickly run into financial trouble, which can ultimately Lead to failure. In this article, you'll Learn the five biggest cash flow mistakes you, as an entrepreneur and business owner, must avoid at all costs.

Not having a cash flow plan in place is one of the biggest mistakes entrepreneurs make. A cash flow plan is a detailed projection of your business's cash inflows and outflows over a specific period. It helps you anticipate cash flow problems and make informed decisions to avoid them. Without a cash flow plan, you're essentially flying blind, and you will Likely not realize you have a problem until it's too Late.

Another common mistake is overestimating revenue. It's common for entrepreneurs to assume that they will make more money than they actually do. This can Lead to a cash flow shortage, especially if you've made plans to spend money based on your revenue projections. To avoid this mistake, you must Look at both best and worst-case revenue projections and have a cash infusion strategy if you miss your sales forecast.

Taxes can be a significant expense for your company, and not setting aside money for this expense can cause serious problems with your cash flow. I have personally worked with entrepreneurs that were forced to pay hundreds of thousands of dollars in back taxes and penalties because they did not plan for taxes.

To avoid this mistake, you should set aside a portion of your revenue to pay for taxes. The exact amount you'll need to set aside will depend on your business's size, Location, and tax obligations. By setting aside money for taxes, you'll avoid a situation where you don't have enough cash on hand to pay your tax bill.

Not managing accounts receivable kills cash flow. Accounts receivable refers to the amount of money owed to your business by customers who haven't paid yet. If you run a cash based or eCommerce business, this may not apply to you, but it is still essential to understand the fundamentals.

Not managing your accounts receivable can Lead to a cash flow shortage, as you may not have enough money to pay your bills or invest in your business. To avoid this mistake, you should have a system in place to track and manage your accounts receivable. This can  include   sending out invoices promptly, aggressively following up on late payments, getting payments or deposits up front and setting clear payment terms with your customers.

Finally, failing to control expenses is a significant cash flow mistake that way too many entrepreneurs make. It's easy to get caught up in the passion of your industry and the excitement of growing your business, but overspending on things Like office space, employees, marketing, and a whole bunch of other unnecessary shit will kill you.

Overspending can quickly drain your cash reserves and Lead to financial trouble. To avoid this mistake, you should create a cash flow budget and analyze your results monthly. Be mindful of every dollar you spend and focus on investing in things that will help your business grow.

CONCLUSION

Cash flow management is a critical aspect of running a successful business, and entrepreneurs must have a good grip on these fundamentals to avoid the pitfalls these mistakes can create. By having a cash flow plan, being realistic about revenue projections, setting aside money for taxes, managing accounts receivable, and controlling expenses, you'll be able to manage your cash flow effectively and avoid unexpected cash flow problems. Remember, cash flow management is an ongoing process, and you should regularly review your financial situation with your financial team to identify potential problems and opportunities. By being proactive and vigilant, you'll set your business up for Long-term success.

FREE TRAINING CASHFLOW MADE EASY

IF YOU WANT TO...

• Take the mystery out of managing your cash flow

• Bring more cash into your company

• Pay yourself FIRST without fear, anxiety or guilt

• Learn the most important areas to invest in for your company to grow faster

CHECK OUT MY FREE TRAINING WITH
18-MONTH CASHFLOW TRACKER

CLICK HERE