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7 Common Mistakes that Impact Cash Flow and How to Avoid Them

January 3, 2012 2 Comments


Cash flow is a lifeblood for small business. Fail to plan properly for the month-end cash flow needs and you will start losing your sleep when the time arrives to write paychecks for employees or to pay vendor bills. That’s why it is very important to keep a keen eye on money coming in and going out, and plan for those times when you will need sizeable cash outflow. Not only that, but you have to take into account unexpected emergencies that will force you to spend money here and now. In earlier post, we showed how managing your inventory, account payables and receivables can help you better manage your cash flow.
In addition to those tips, you should also look at the obvious as well as not-so-easy-to-find ways in which small business owners squander cash and end up in dire situations. Here are examples of the mistakes many small business owners make and how you can avoid them.
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How to Reduce Startup Expenses when Launching a Business

October 20, 2010 1 Comment


Most people who are launching a business underestimate the time, money and effort required in the initial stage. They end up spending more time and money than they had initially planned. While they are working hard to put everything in order to start the business on-time; the bills continue to pile up and it comes as a shock when they examine the total expense incurred before the money has even started coming in.
There are good reasons to reduce your start-up cost. The less money you spend before you open your business, the more money you will have for advertising and promotion; which is crucial in the early stage. Besides, it will allow you to set more money aside for working capital; which is particularly important for first few months.
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How to Lower Fixed Cost to Achieve Financial Flexibility

October 13, 2010 3 Comments


We mentioned in the previous post that in this times of economic uncertainty your business needs to have flexibility to respond to changing market conditions. One of the ways you can do this is by converting as much of your fixed costs to variable as possible.
The reason for converting fixed cost to variable is simple – fixed costs don’t change with sales or production; while you can control variable costs in response to change in sales. Monthly rent you pay for the building is an example of fixed cost; whereas the amount you pay to buy raw material to make final product (commonly known as Cost of Goods Sold) is an example of a variable cost.
High fixed cost can hurt you in difficult economic times, such as now, and can even drive you out of business. This is what happened to many of the businesses that simply could not cover fixed cost with the sales plummeting. There are several ways in which you can convert fixed costs to variable. Below we have highlighted them.
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