Join Jim Stice for an in-depth discussion in this video Managing cash on the beach, part of Finance Essentials for Small Business.
- I have a friend who's a small business owner.…Let's talk about his cash flow management practices.…I will disguise the actual nature of his business…to preserve his privacy.…- So, what is the nature of his cash flow management issues?…- He operates, let's say, a beach side shop…in a vacation beach area.…He sells food, souvenirs, and some groceries.…He also rents jet skis and scooters.…- Well I'll bet his business is very seasonal.…High business in the late spring and summer…and almost no business in the winter.…
- Exactly.…He tells me that he maintains a rolling…30 day cash flow projection.…He forecasts how much cash he will collect from customers,…and how much cash he will have to pay the suppliers…for each day for the next 30 days.…- So, has he ever had a big crisis…that threatened his survival?…- Yes, a few years ago.…It was rumored that one of the big cruise lines…would begin using his harbor as a stopping point.…Of course this would dramatically increase customer traffic.…- Well I'll bet a lot of new competitors materialized.…
- Describe the most common reason small businesses fail.
- Identify two reasons why your business plan needs to budget cash inflows and outflows for the first six months of your business’s operation.
- Write the formula to forecast cash flow for the first four months of your small business.
- Explain the first step you should take if your new small business is not making the profit you anticipated.
- Identify the most important thing to keep in mind if you are considering faster growth for your small business.