It’s great to have a healthy cash flow, but a cash flow without a plan? Not so great. Lacking a plan when it comes to managing cash flow can definitely cause problems.
Let’s say Barbara owns a business. She makes a nice cash flow every month. She pays herself a high salary and maintains a fun, comfortable lifestyle. Barbara also has a large monthly payment for last year’s taxes, past-due vendor bills, and every week she scrambles to make payroll. Barbara makes her decisions based on the fact that the money just keeps flowing. This is bank-balance accounting. It’s a stressful game that is played almost weekly, with a few sleepless nights here and there.
What if Barbara had a plan for all of that cash coming in? What if she actually allocated some portion of it to work in her business, some portion to pay taxes, and a portion to pay for her lifestyle? With a bit of planning and a few adjustments to her habit of treating her cashflow like a personal piggybank, her business would be much less stressful.
Profit First is that cash flow management system. This is the methodology I specialize in helping small businesses implement. You can schedule a call with me for a discovery chat about Profit First, or read up on the system here.