Wednesday, May 5, 2010

Managing Your Home Business Cash Flow

By Naz Daud

Whatever kind of home business you run it is vitally important that you keep an eye on your cash flow. If you don’t it is very easy to run into problems – and that can happen even if you are
quite successful.

When you first start out you have to think about how you will fund your business. This may vary significantly depending on what kind of business you run. For example many internet businesses can be run on a shoestring budget, provided you have already got a computer and internet access of course. But other businesses may require thousands of pounds to set them up. It
all depends on what you want to do and how much equipment you want to buy to be able to do that job.

Once you get up and running you will have a better idea of how much money you can bring in. Obviously it doesn’t matter what you are doing – you will always build the business up and end up earning more in the long run, provided everything goes according to plan. But you should at least have an idea of how much you are capable of bringing in.

If your business is bringing in £2,000 a month, and your outgoings – including your salary – add up to the same amount, you might think that you are doing well. In a sense you are, because you are able to meet all your outgoings and also pay yourself a wage. But it doesn’t leave any room for mistakes or problems.

This is why you should always work towards having income that is considerably larger than your outgoings. If you can work to build up a cushion of cash in your business account, you will always know that if someone doesn’t pay up on time, your business won’t be at risk. If you can be confident of having a good cash flow that has a cushion like this, you can move ahead more confidently with your business.

Many business owners don’t think too much about cash flow. Instead they focus on how much they are bringing in each month. This is understandable but it should not be the only thing you
are focusing on. You want to know if your business is in profit, and you also want to know if you can cope with an unexpected problem which means less money is going to come in for a while.

As you can see it really does pay to learn as much as you can about cash flow. If you keep a regular eye on it – say once a week for example – you will be far less likely to be surprised by any issues or problems that could crop up in your business. And this should prevent you from instantly becoming a casualty if your business goes through a rough patch.

The moral is never to take your eye off your cash flow. If you do, you might find it flows out of your business and doesn’t come back.

About the Author: Naz Daud - CityLocal Home Business,,


No comments:

Post a Comment

Please send in your feedback. I appreciate your visit.