4 Keep Your Cashflow Positive – Analysis of Business Finance

You’ve heard it before. Money is the life blood of all business and commerce, whether locally or globally. Therefore, we must not only safeguard our current revenue streams, but understand the simplest solution to opening them up to new possibilities. This could mean the difference between making payroll, keeping the doors open, or shutting down your business permanently. 

Revenue and Profit are two different animals

We see this today with Amazon. They have incredible revenues but their margins are super tight, which makes their profitability significantly less than Apple, but they are playing for the future and can do so because their revenues are exceeding expenses. Even when you are investing in your business, it’s important never to over extend your reach; this means credit should only be used when your business needs to get to market, and will have near guaranteed returns. It’s always best to use cash on hand, and be more liquid than relying on future earnings.

You are losing out on Revenue

Most businesses today don’t make it convenient for the shopper to pay, whether through credit card, moneybookers, Paypal, or other types of payments. You still see signs of “cash only” in 2013, where digital money is becoming the dominant player; as a business man or woman you need to position yourself to capture this lost cash flow. With credit cards and now mobile secure payments, consumers now not only expect every option, they simply demand it. Even if it’s one out of 100 customers, that 1% can mean the difference between expanding, and playing it safe (which according to Seth Godin of Squidoo is a death sentence – you have to dare to be brave and expand, but that requires cash flow).

Research and development Business expansion

If your business isn’t moving forward, it’s moving backward. If your cashflow is barely meeting your expenses, then you won’t be able to see far into the future. Like a chess player, you have to think 15 moves ahead to be a grand master in your industry. With stress, mounting bills, and a stifling money supply, you will think and act as a Pawn, rather than the King / visionary you need to become.

Attracting the Best Partners and Employees

People are proud to work at Google, Facebook, Amazon, eBay, and other major brands that represent a healthy business, with great solvency and liquid assets. If your company isn’t reporting revenues that exceed expenses (don’t cook the books!) then you will scare off the best young talent pool graduating from college, or leaving other companies. Instead, you will be the company they leave to go to a larger, more credible company. Don’t become the starter business for someone to pad their resume; take charge, literally, evaluate what your competitors are doing to remain profitable, and see where you are leaving money on the table. It’s also important to slash unnecessary spending, but most businesses focus on cutting vs growing, which is a recipe for disaster.

Author's Bio: Matt Anton writes on many business and finance topics. He relies on http://merchantaccount.co/ to process payments at the best rates possible.