How much money will I need to keep monthly cash flow going?
If I bought a business with $581,000 in gross sales, cost of goods of $178,000 and $235,000 in expenses, how much cash would I need to come into the business and keep the cash flow going and maintain a good profit?
You're way off. Cash flow is about flow and timing: Factors like how fast you pay and how fast you get paid are vital, but you know nothing of that by just knowing the sales, costs and expenses.
I've done a 20-minute free video for you, online, that will explain how cash flow works. Please take a look at http://timberry.com/videos/. It's vital, too. Take the time to get this right, or bring on a team member, because cash is what runs your business.
Tim Berry is the chairman of Eugene, Ore.-Palo Alto Software
, which produces business-planning software,