One of the Biggest Small Business Challenges
One of the biggest challenges facing most small businesses is available cash: for payroll, rent, products, etc.
Without cash, you’re done.
In his amazing book, CEO Tools, businessman and author Kraig Kramers says this about tracking your cash on a daily basis: “most professional managers run out of cash because they don’t have the most basic tool of all, namely a daily cash report.”
To help you sleep at night and/or make you aware of your cash flow problem immediately, take 5 minutes each day a look at your available cash situation.
Take your available line of credit, add the balance from your cash account, and you have the total amount of “cash headroom” (as Kramers calls it), for bills, purchases, payroll and other expenses.
It’s really that simple, but it needs to be done each day.
One last thing: on a weekly basis, look at upcoming expenses for the following week such as inventory purchases, payroll, etc. You can then project how much cash you’ll need and when you’ll need it.
It may sound like a pain to do this daily, but I can assure you, the pain of running out of cash hurts a lot worse.