{"id":2123,"date":"2018-01-11T05:54:29","date_gmt":"2018-01-11T11:54:29","guid":{"rendered":"http:\/\/successseriesllc.com\/wordpress\/?p=2123"},"modified":"2018-01-30T12:55:55","modified_gmt":"2018-01-30T18:55:55","slug":"cash-flow-goals-every-business-should-have","status":"publish","type":"post","link":"http:\/\/www.successseriesllc.com\/wordpress\/2018\/cash-flow-goals-every-business-should-have\/","title":{"rendered":"Goals Series #1: 5 Cash Flow Goals Every Small Business Should Have"},"content":{"rendered":"

\"5#BuildYourBusiness
\n<\/strong><\/h2>\n

Life Area: Professional<\/strong><\/p>\n

Maintaining cash flow positive is something that many small businesses struggle with. After all, it only takes one or two late net 90 clients and you may find yourself among the 90 percent of small businesses who fail every year due to cash flow problems.<\/p>\n

Setting goals for cash flow management can help make sure you have a profitable business and enough cash to offset your monthly expenses. Here are five cash flow goals that every small business should aim for:<\/p>\n

 <\/p>\n

5 Small Business Cash Flow Goals<\/h2>\n

 <\/p>\n

1) Pay attention to margins<\/strong><\/p>\n

By \u201cmargins\u201d, I mean both gross margin and net profit. Gross profits are what are left over once you subtract the cost of goods sold. Margins vary by industry, but there are some things you can do to ensure yours are healthy. That includes controlling the cost of materials, labor, and setting the right price point.<\/p>\n

Don\u2019t forget your net profit margins (before taxes are paid). This is what\u2019s left from your gross margins after your expenses have been paid. If your net margins are below 10 percent, you should reassess all the above. A good goal is a minimum 10-20 percent. Grocery stores run 3-4%, home builders 8-10%, and suppliers can run as much as 25-50%, so be sure to compare yours to the relevance of your industry.<\/p>\n

 <\/p>\n

2) Pay yourself a salary<\/strong><\/p>\n

It\u2019s not uncommon for new business owners to work uncompensated. However,\u00a0many continue doing so even when they start turning a profit. It\u2019s believed that as many as 90 percent\u00a0of small business owners underpay themselves.<\/p>\n

<\/p>\n

While it may seem like the thrifty thing to do, underpaying yourself can jeopardize your personal finances. This can leave\u00a0you high and dry if your business ever runs into cash flow issues. It also suggests that you aren\u2019t confident in the profitability of your business.<\/p>\n

 <\/p>\n

3) Have finances in reserve<\/strong><\/p>\n

We know we\u2019re supposed to\u00a0have enough cash set aside to cover our personal cost of living for six months. But\u00a0business owners also need to have cash in reserves or working capital. At a minimum, plan on having enough cash to cover at least 2-4 weeks of business expenses. You\u2019ll need even more if your client invoice terms are net 30 or higher. However, it\u2019s always a good idea to aim for a cushion of 90 days to cover any emergencies like illness, natural disasters, market fluctuations, etc.<\/p>\n

 <\/p>\n

4) Avoid debt<\/strong><\/p>\n

Debt erodes cash flow, period. If you do have debt, try to pay it off as quickly as possible. Lines of credit are a good option for doing this. A line of credit is a given amount of money you can borrow when you need it, and repay back when you don\u2019t. It is different from a loan because you don\u2019t have to use it.\u00a0But you can use it as a fallback option if you have unexpected cash flow issues.<\/p>\n

 <\/p>\n

5) Save for growth<\/strong><\/p>\n

Business loans, hard money lenders and\u00a0investors are an obvious\u00a0option for helping you expand or grow. But\u00a0smaller businesses should try to self-fund whenever possible. Operating with cash and no debt will put your business in a much stronger financial position.\u00a0Especially if your long-term plans include future third-party investment or the sale of your business.<\/p>\n

 <\/p>\n

Your Action Step <\/strong><\/h3>\n

 <\/p>\n

Be realistic about your goals. Aiming for super high margins, an unrealistic salary, or endless cash reserves can be\u00a0detrimental to\u00a0your business. Think about each of the above steps and prioritize each based on what\u2019s realistic and achievable for\u00a0your industry, fiscal state, and wider business goals. Start by revisiting your business plan, talking to your accountant, and then go from there.\u00a0 Many businesses opt for a business coach to guide them. If you think I would be someone who you would want to explore a business coaching relationship with, check out my business coaching page<\/a> on my website<\/a> and give me a call.<\/p>\n

 <\/p>\n

Please share this post with your family and friends.\u00a0<\/strong><\/p>\n

My mission is to inspire people and organizations to live their highest vision.<\/strong><\/em><\/p>\n

I am a Success Strategist and Master Coach. I provide transformational coaching and training for individuals and organizations to help you Grow Your Life<\/strong> and Build Your Business<\/strong> by getting clear and focused on what you want, why you want it, and how to create it. Learn more about me at SuccessSeriesLLC.com<\/a>.<\/p>\n

There is no better endorsement than that of a friend, so if you like what you\u2019re reading or are using my many\u00a0FREE resources<\/a>, tell a friend to join the\u00a0Tom Hart Success Series Community<\/a>, to receive email notifications of\u00a0new blog posts<\/a>\u00a0and\u00a0Talk with Tom podcast episodes<\/a>,\u00a0learn of\u00a0upcoming events<\/a>,\u00a0and other news, by\u00a0visiting my website<\/a>\u00a0 and clicking on the offer to receive my FREE monthly resource by leaving their email address OR forward this to them and have them simply click here<\/strong><\/a> (we respect your privacy and do not tolerate spam and\u00a0will never sell, rent, lease or give away\u00a0your\u00a0information to any third party<\/em>).<\/p>\n","protected":false},"excerpt":{"rendered":"

#BuildYourBusiness Life Area: Professional Maintaining cash flow positive is something that many small businesses struggle with. After all, it only takes one or two late net 90 clients and you may find yourself among the 90 percent of small businesses who fail every year due to cash flow problems. Setting goals for cash flow management […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,48],"tags":[],"class_list":["post-2123","post","type-post","status-publish","format-standard","hentry","category-build-your-biz","category-life-areas"],"yoast_head":"\nGoals Series #1: 5 Cash Flow Goals Every Small Business Should Have - Success Series<\/title>\n<meta name=\"description\" content=\"Setting goals for cash flow management can help make sure you have a profitable business and enough cash to offset your monthly expenses. 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