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5 Hacks for Managing Your Business Cash Flow

5 Hacks for Managing Your Business Cash Flow

Above all else, every business needs cash to survive. Not IOUs or intangible assets, but cold hard cash sitting in your bank account that your business can use in an emergency. A small business owner must manage their cash flow to ensure that the business has enough money. Banks will not just grant a loan to small business short on cash like they might with a larger corporation, so creating a positive cash flow is one of the most important things a business owner can do.

Fortunately, a lot of the steps towards maintaining a good cash flow are fairly intuitive. Here are some basic steps which every new business should do to ensure a solid starting cash flow.

Prepare a Cash Reserve

Murphy’s Law is a thing. It always seems that it is right when a business has negative cash flow that it gets hit with sudden emergency expenses or a loss in revenue. But if your business can save money during prosperous periods, it will have a cushion during tight periods and ensure that negative cash flow is not an immediate, catastrophic crisis.

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Knowing how much cash reserves your businesses should hold onto at any period is tricky, but a general idea should be to keep somewhere between three to six months’ worth of operating expenses. That number can vary a lot depending on factors such as what stage a business is in as well as whether it is in a more volatile industry or not. Entrepreneur has an excellent guide on some of those potential factors.

Conduct sales forecasts

Sudden emergency expenses are inevitable for any business. But all too often, these “sudden” expenses or drops in revenue are really things which a forward-thinking business should have anticipated in advance. As an obvious example, many stores will see reduced income in January as the holiday season comes to an end.

Every business should look at past sales and expense numbers, identify problematic periods during the year, and create a forecast which will provide a rough estimate for how much your business can expect to earn during the coming months. You cannot completely simulate the future and there will always be surprises, but gathering information and making predictions in advance can ensure your business is ready to handle new challenges.

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Pay bills on time, but not early

You may feel responsible when your business pays its bills in advance, but remember that time is money. There is no reason to pay a $500 bill now instead of paying $500 when the bill is due next week. If something urgent happens during that week, that extra $500 could help stave off any immediate emergencies.

If you intend to pay a bill in advance, talk to your creditor and see if they will give you a discount if you pay in advance. Similarly, you may want to offer a discount to customers who pay you early. It is often better to have cash in the bank now as opposed to waiting for a customer to pay you a somewhat larger sum eventually.

Get an Accountant

Practically no business owner wants to stare at financial numbers all day. While you may be tempted to save money by doing your business’s finances yourself, you may end up making more mistakes than a professional or losing morale by the drudgery that can be bookkeeping.

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A business accountant can help your business so much more than by merely tracking expenses. Accountants can offer you additional financial advice beyond managing your cash flow, help you lower your taxes and expenses, and let you focus on the parts of running a business that you like. If you cannot afford a full-time accountant, then get a part-time bookkeeper who can still organize your business’s finances for a few hundred dollars per month.

Slash expenses

Ensuring a positive cash flow is not just about getting as much money as possible, but ensuring that your business does not waste money as well. While slashing costs to the bare minimum may not always be the best move for your business, there is always fat that you can trim to improve your business’s bottom line and cash flow.

Some possible methods to reduce expenses include buying used equipment, not always going for the latest in technology, and employing content or social media marketing over traditional advertisements. The Houston Chronicle has a few other examples of how a business can try to slash costs without negatively affecting worker productivity or customer service.

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Managing your cash flow requires preparing in advance, knowing what areas your business is struggling to make money in, and ensuring that your business is paid in time and costs are low. But if you work on keeping cash on hand, this will ensure that your business always has a cushion during more troublesome times and can keep afloat while less cautious competitors fail.

Featured photo credit: Sean McMenemy via flic.kr

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Last Updated on August 15, 2018

30 Fun Things You Can Do This Summer Without Spending Much

30 Fun Things You Can Do This Summer Without Spending Much

Summertime can be a real strain on your wallet. The sun is out, there are people to see, places to be; it’s no wonder you might be short of funds during these sunny months. Not everything has to cost you an arm and a leg.

Take some time to go through this list of 20 cheap summer activities and make some realistic goals to complete as many as you can.

Video Summary

1. Visit a strawberry festival

Summer is prime time for tasting strawberries. More often than not, an area that grows strawberries will have a strawberry festival. Indulge yourself in strawberry pies, jams, cakes and more!

2. Have a picnic

Take your partner or your family to the local park and enjoy a relaxing picnic. Designate each person to bring one food item of their choice to add to the fun.

3. Camp in your back yard

    The summer heat can sometimes make it hard to sleep. Why not enjoy the heat outside in the yard? Pitch a tent or gaze into the night sky.

    4. Take long walks

    Discover something new where you live. Take the afternoon off from your chores and go for a long walk. You may be surprised by what you discover.

    5. Break a world record

    Breaking a world record doesn’t have to be time-consuming. You could even break one on your lunch hour. Give it a go!

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    6. Go on a bike ride

    The number of bike paths on roads in big cities has increased dramatically over the years. Take advantage, and enjoy the summer breeze.

    7. Join a gym class

      The gym is not everyone’s idea of a good time, but why not go with a friend a join a class? Spinning, yoga and step classes are always more fun with friends, and a lot of gyms allow you to pay-as-you-go.

      8. Find a new hobby

      The summer is the perfect time to find a new hobby. Serotonin (our body’s natural “happy” hormone) is produced by the sunshine and will be at a yearly high, which is great for when we want to tackle something new.

      9. Join a sports team

      Not all sports teams are competitive and require huge amounts of your time. Join in the fun with like-minded people, get fit, stay healthy and make some friends along the way.

      10. Make a slip ‘n slide

        Gather your friends, some plastic sheeting, a hose, washing up liquid if desired, and make a huge slip ‘n slide just like these guys. Granted, yours won’t be as big, but you get the idea… it’s fun!

        11. Make a treasure hunt for your kids

        Today’s digital world sees our children more often than not playing inside than outside. Why not create a sense of adventure by making a treasure hunt? Only rule? It has to be outside.

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        12. Visit a free festival

        Towns and cities are awash with free festivals, with themes from film to science. Scout your local area and discover something new.

        13. Visit the zoo

          Let’s face it: we love animals. While browsing news websites and social media networks you’re bound to come across a few pictures of cats. Take a trip to your local zoo for a better experience.

          14. Take a road trip

          Enjoy the open road with a few friends and take a road trip somewhere–anywhere. Just go out and enjoy the sunshine!

          15. Play ultimate frisbee in the park

            Frisbee is always great fun down the park, but why not turn it into more of a competitive sport by playing ultimate frisbee?

            16. Make your own ice cream

            Ice cream is a very versatile dessert. Make a sandwich, enjoy a cone, or simply just enjoy a bowl full. Better yet, making your own ice cream allows you to create any flavor you want.

            17. Invite your neighbors over for a BBQ

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              When was the last time you invited your neighbors over? Do you even know them? Now’s your chance. Just ask each person to bring a food item so costs don’t mount up for you.

              18. Get a summer job

              For many students, summer is the time for relaxation and fun. But who said earning money and being productive isn’t fun? You only get out what you put into a situation.

              19. Attend a charity event

              Attending a charity event is a great way to raise funds and awareness for a cause, meet new people, and generally have a good time. Search for your local charity event today.

              20. Visit a national park

              National parks are a great way to explore nature and learn something new. You could even volunteer and make a difference in helping restore natural habitats.

              21. Visit your local comedy club

                Local comedy clubs are extremely underrated. They are cheap to attend and no doubt you’ll have a barrel of laughs.

                22. Make your own hammock

                  Hammocks are very relaxing, are perfect for summer afternoons and are surprisingly easy to make.

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                  23. Read in your new hammock

                  Now you have your very own hammock, the only thing left to do is enjoy it. Grab your favorite book and read to your heart’s content.

                  24. Watch a movie outside

                  Movies are great. Relaxing outside in the evening is great. Put them together and you’ve got a perfect combination. In D.C, Maryland and Virginia this summer, for example, you can enjoy a huge number of movies outside.

                  25. Take a hike

                    Hikes are a great way to keep fit and see more of Mother Nature. There are countless trails available for you to explore. Why not try some this summer?

                    26. Learn how to fly a kite

                    As a child, you probably had a kite and haven’t touched it since. Why not dust it off and attempt to fly it? It’s tricky, but well worth the challenge.

                    27. Work out at the park

                    American cities are full of parks with ample space for a work out session. No doubt you’ll be happier to work out in the sun rather than a crowded gym.

                    28. Take your dog to the beach

                      One of the many joys of owning a dog is taking him or her for long walks during the summertime. This joy is enhanced when visiting the beach, for both you and your dog.

                      29. Make a summer smoothie

                      Healthy, delicious and perfect for the summer. Not only that, there are countless recipes ready for you to try.

                      30. Attend a free yoga session at the beach

                      No experience needed and all skill levels are welcome. Take yourself and a buddy down to the beach and try some yoga. You’ve got nothing to lose!

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