All successful small business owners know that cash is king. Without proper cash flow management, your newly launched small business could find itself being unable to pay its own creditors or staff, resulting in premature closure.
“Ensuring that you have a proper cash flow management system in place is absolutely key to success for any small business owner,” says Errol Meyer, Legal Specialist, Advisory Services at Standard Bank Financial Consultancy. “One of the biggest reasons that so many small businesses go under in the first year is because they haven’t managed their cash flow properly.”
Mr Meyer says that proper cash flow management starts with having a formal financial plan in place for the business. To this end, he offers the following advice:
Create a Dedicated Financial Plan for Your Business:
Meyer says it is essential that you differentiate between your personal financial plan and that of your business. Too many owners dip into their business account to purchase personal items, leaving the business in a precarious financial position. How do you explain to staff that you can’t make salary payments because you purchased a brand new car for yourself in the name of the business?