Accelerate Business Group, LLC

No matter your political persuasion, it's hard to disagree the economy isn't pumping along the way most business leader's wish. 

Things could be tougher, but many companies are feeling the slowdown.  In many markets, money is in short supply, purchase decisions are delayed, upgrades are  put on hold, and prospective and existing customers increasing espouse the view maintaining the status quo is the wiser of competing options.

In times like this, many businesses face falling sales, revenue shortfalls, and cash flow crunches - percentage of renewals can fall and customer churn can increase.  This is not to say the sky is falling, it's just reality many businesses now face in many markets, especially markets driven by disposable income and earnings per share.

While current conditions are challenging, there's a lot of potential for many of us to not only maintain, but increase profitability, as well as increase customer loyalty and the value of our customer base.  We need to resist the pressure to panic and approach current business conditions thoughtfully.  Stable cash flow is the immediate need.

Cash flow is the ability to bring money into your business at a rate meeting or exceeding your need to pay expenses.  And while cash flow is critical in all business climates, it takes on even larger importance in tough economic times - when money is in short supply, credit lines are maxed, and the cost of money is prohibitive.  Maintaining a strong cash position in your business is critical to survival.

As I was quoted in a recent Wells Fargo Small Business newsletter on best practices for streamlining cash flow, cash flow problems can damage your business several ways:

• Your expenses go up when you can't pay bills on time, as you're assessed late fees—"That's a cycle that digs its own hole," he says.
• Planning is hindered—Plans you may have for a product launch, the addition of business equipment, advertising and promotion or for anything else that might be growth-oriented can be derailed.
• Problems in your workforce—Cash flow issues can cause panic among employees. If, for example, people have questions about being able to cash their checks, they question the viability of a business, which can lead to turnover.
• Customer turnover—What if you have trouble paying suppliers and they begin to slow the pace of delivery of goods and services to you, which, in turn, causes difficulty in getting goods and services to customers? If lead times on product delivery get longer on a sustained basis, loyal customers won't stay loyal that long.

Cash flow problems aren't the end of the world, but it can seem like it when you're in midst of the problem.  The truth of the matter is cash flow is a serious problem, but if you act quick - and smart - it's a manageable problem whose cycle of havoc can be ended.

With this post, I'm opening a series of posts, articles, and events on cash flow, focusing on the six most common cash flow challenges and their associated solutions:

Common Cash Flow Challenges

• Not enough new customers
• Margins are too low
• Expenses are too high - this month, quarter, annual, etc.
• Customers don’t pay or don't pay on time
• Customers don’t purchase more than once or don't purchase often enough
• Customer turnover is too high

Over the coming weeks, I'll tackle each of the challenges listed above, speak to the cash flow problems they can lead to, and identify a number of meaningful and practical things businesses can do to avoid them and fix once they've been identified as a problem.

With this series, I hope to provide a simple framework for dealing with cash flow issues and show you a number of ways to avoid them from occurring in the future.