Main Idea
What is the cause of business failures? How can a business that is losing money be worth a lot? What is the number one reason why a business shuts its doors?
Expansion of Idea
The current economy has created some enormous problems for a variety of people. Small business owners, charities, large businesses, governments, and a lot of families are having trouble with cash. For a number of years, cash has been taken for granted. The economy has been strong and people have not thought about or worried about their cash flow. But it isn’t lack of sales that force a company to close its doors. It is lack of cash. Businesses can be profitable as they file for bankruptcy. Businesses can be losing money and be sold for outrageous sums. What is the difference?
CASH FLOW!!!!!!
The new owners of Anheuser Busch have completely decimated the loyalty of their suppliers by forcing them to accept 90-day payment terms. This will put some of them out of business. And I am sure they were profitable.
Cash flow is critical for organizations to survive. Whether you are a leader or a team member, you need to do what you can to help your company’s cash flow. In the past it may have made sense to buy a new copier. Now it may make sense to lease the copier. Yes, it will cost you a little more, but you are preserving cash. New clients are worthless if they are not going to pay. If you are in sales, you need to be aware of the warning signs for customers. We have to stay focused on cash flow and planning for possibilities. If you or your company does not have a plan, then it is time to start. This is not management’s problem. This is everyone’s problem.
Areas to Start:
Develop a cash flow plan.
Evaluate customers and their payment patterns.
Brainstorm alternative sources of cash if needed.
Carefully manage bank loans and lines of credit.