Cash Is King
There is no statement as important as Cash is King for a business. Without a positive cash flow no business can survive for very long. When you are starting a home based business keep in mind the following top ten list to make sure you keep your cash as long as possible:
- Think Through Your Idea. Do not spend any money before you have thought through you idea. Read
- Determine your cash position. The unfortunate reality is that starting a legitimate business requires money. Someone has to pay for the business registration, license fees, and utilities and so on. The good news is you can do much of this yourself and in most cases for less than a few hundred dollars.
- Review your plan to determine what is a “must have, would like to have” and “wow – wouldn’t it be great if”. For example – do you absolutely need to have a web site to start? How long can you put off purchasing business cards, goods and services? Prioritize your needs.
- Review your needs for items that can be: bartered for, purchased used, or outsourced.
- Talk with friends and family to discuss if they can assist you. You might find an unused computer, a friend who develops or hosts web sites, a vacant building needing repair, consignment items, or even a partner.
- Start networking and then continue to network. Networking is time consuming but generally not expensive. There are numerous free networking internet sites and virtually all communities have local networking groups. Do your homework and do not be afraid to ask for help.
- Know Your Cash Position. Based upon the preceding information, you now know how much money is truly available and where you may go for help.
- Full or Part-time. Decide if you are going to pursue your opportunity full time or part-time. Keep in mind the less time you spend on your business the longer it will probably take to achieve a positive cash flow.
- Complete your planning.
- Start with passion and determination and remember “Cash is King”.
This is an excellent summary and warning for those who are hoping to call themselves entrepreneurs.
I especially like the first comment (Think through your idea). All too often, would be entrepreneurs fall in love with their ideas and jump like ADHD suffers on Methamphetamine from one failure to another. Having an idea is irrelevant. To be an entrepreneur means you must know how to monetize your idea, what risks (risk effects really) attach to the idea and how to optimize those risk events.
Watching the cash is the easiest technique for an entrepreneur to keep track of the business. Leave income statements and balance sheets to the big guys. Your cash will give you the first warning that something is wrong.
The counter point to that, however, is that you need to know your business. Are accounts payables important? What about accounts receivables? If they are beware of cash accounts being offset by them. If your cash is increasing great … unless your accounts payables are increasing even faster or your accounts receivables are falling even faster. As an entrepreneur you need to identify which of the current accounts you need to monitor. Cash just happens to be one that always has to be monitored.
Again thank you … a truly excellent post. I’ll have to keep reading your blog.
Glen Ford
http://www.TrainingNOW.ca
http://www.LearningCreators.com/blog
Thank you Glen,
You raise a good point. Cash flow management doesn’t stop after the start-up phase. A/R management, factoring and A/P terms all have significant impact on the bottom line. These are good problems. The challenge is getting to that into position first.
Stuart