4 Reasons Your Business Is Running Out of Cash

running out of cashFollowers of my blog have heard me say it before: "Cash is king." You must maintain a positive cash flow to stay in business. So, why does a business run out of cash?  Typically, there are four reasons:

Your Sales Are Not High Enough

This is usually more of a "marketing" problem than a "selling" problem.  You must remember that you are in the Marketing Business!  Your industry may be widgets, but every business owner is in the Marketing Business.  Thus, your marketing strategy may be the most important aspect of your business!  Without a good marketing strategy, you stop feeding your pipeline, which leads to an inadequate volume of sales!

You Are Not Collecting Money People Owe You

It is not uncommon for owners to get so caught up in the work of their business that they forget to bill for their services or forget to track what they're owed.  Make sure you are collecting your money! Your cash flow depends on it.

You Are Not Charging Enough to Cover Your Expenses

One thing a small business cannot do is compete on price.  For example, don't try to compete with the big box stores on price.  Also remember that there will always be someone who is willing to go out of business before you just to make a sell!  What you do have is the capability to appeal to a different segment of the market by making sure you offer extra value for the price they pay.

You Are Spending Too Much Money Running Your Business

Watch your expenses!  Keep a tight control on what you are spending.  Don't cut out marketing, but do track and measure everything you spend on marketing! Practice direct response marketing! Most businesses do not have to run out of cash.  Create a budget to project your income and expenses and then make sure you follow these guidelines!

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