Virtually every business says they want to grow. And almost all firms have cash flow challenges from time-to-time. How can you accomplish both growth & solid cash flow management simultaneously?

Be smart. Have a plan. Work your plan. Oh, and follow these 9 guidelines:

  1. Start with more cash than you need. Forecast your cash flow needs using a Cash Budget and then do 2 things:
    • Decide how much cushion you are comfortable with [10-20% is very common] and maintain that.
    • Secure a Revolving Line of Credit from your banker as a backup.
  2. Grow with a strategic financial plan that projects your revenues, expenses, profits & cash flow. Then develop specific actions to achieve these.
  3. Create a strategic [long-term] plan; break it down to a business [medium-term] plan & then an operating [short-term] plan. Then work your plan.
  4. Have you Strategy drive your Tactics; not the other way around. Tactics are used to achieve your strategies.
  5. Understand the difference between profits & cash flow. Profits repay long-term debt & equity; cash flow repays payables.
  6. Learn to understand your financial statements so you can use the information to manage your business better.
  7. Manage inventory so it doesn’t manage you (out of business). Eliminate unnecessary, excess & obsolete inventory early.
  8. Decide what level of working capital you want to maintain; then do so. Use technology to reduce excess & free up cash flow; permanently.
  9. To achieve this, manage the various components of working capital (receivables, inventory & payables) aggressively.

If you regularly follow these 9 guidelines, you will always have enough cash flow to allow you to comfortably grow; and to sleep at night.

Would you like a copy of our Cash Budget template? Want to know how you can achieve better Growth & Cash Flow management? Contact me at DanielFeiman@BuildItBackwards.com

FREE DOWNLOAD

Your choice of THE TOP 10 CHALLENGES TO SUCCESSION PLANNING & HOW TO OVERCOME THEM or THE TOP 10 ROADBLOCKS IN EXIT STRATEGIES & HOW TO GET PAST THEM
When you sign up for the BUILD IT BACKWARDS newsletter

Thank you! Check your email for the download link.