Cash flow management is something that is so important to businesses and yet it gets overlooked and mismanaged too often. Within 1 year, 50% of businesses fail and within 10 years, 90% will fail. The main factor that causes failure in business is running out of cash. On this episode, Mick and Andre lay out the different ways that businesses get caught up with cash flow problems. They also give easy and actionable steps showing you how to protect your business from mismanaging cash.
Mick and Andre lay out the differences between profit and cash flow and relate that two to important aspects of your business: your income statement and your balance sheet. They discuss a few tripping points where businesses tend to slip up and run out of cash and they show how you can avoid it by putting systems and processes in place that allow for that gap in time between payments and withdrawals.
Listen to the Full Episode:
What You'll Learn In Today's Episode:
Why cash flow is the reason that most businesses fail.
The difference between profit and cash flow.
Why businesses are often the most vulnerable when they are growing and successful.
Why it’s so important to understand the gap in time between payments and withdrawals.
The different dynamics that impact your ability to make money and your ability to make cash.
The importance of consistent and working processes and systems that track cash flow.
How to set up ways to predict gaps in cash so you can plan ahead.
Why you should be building a good relationship with your bank or lenders.
Ideas Worth Sharing:
“This is the one area that people should understand and know how cash works within their business.” – Andre Gien
“Have a good cash forecasting capability – it doesn’t have to be complex. Simple is good, but it’s gotta work.” – Andre Gien
“Every day you should really be understanding your cash position and understand how cash is going to perform in the near term as well as the long term.” – Mick Holly
Resources In Today's Episode:
- US Bureau of Labor Statistics - Business Failure Rates
- Science of Business Wealth
- Are You Growing Broke?