Avoiding Small Business Cash Flow Problems


Avoiding Small Business Cash Flow Problems

Cash flow can be a big problem for a big business, and the makings of a disastrous situation for a small business. There isn’t a small business owner anywhere that hasn’t had that sinking feeling in the pit of their stomach on payday and/or bill-paying day.

Maybe you can’t completely¬†avoid all of the cash flow problems that seem to be the evil twin of a small business, but you can help yourself to avoid most of them.


  1. Keep your overhead as low as possible for as long as you can. You don’t need to impress your competitors. Your business is to serve your customers as well and as efficiently as you can while spending as few dollars as possible to do it. The day for big paydays will come later for

you, and you will be able to hire others to do the “dirty” work for you someday. But when you start a new small business, make “I can do that myself” your mantra.


2.Keep your finger on the pulse of your business. Be sure you know how fast your income is growing in relation to how fast your expenses are growing. If expenses grow faster than income, you’ll be in big trouble in a hurry. If income grows faster than expenses, you will avoid future cash flow problems.


  1. Concentrate your time (and money) on creating repeat customers rather than seeking new customers. It is far less expensive to sell a second or third time to the same customer than it is to get a new customer.


  1. Try to schedule the payments that are due TO you in the early days of the month and the payments that you OWE to others toward the end of the month. You can’t always do that, but it can help avoid cash flow difficulties.


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