Got Money?

Cash is the lifeblood of your business. Here's how to keep it flowing.
Magazine Contributor
2 min read

This story appears in the March 2008 issue of Entrepreneur. Subscribe »

Cash flow is the key to success; good cash-flow management means a thriving business. "If you're out of cash, you're out of business," says Fred Parrish, executive director of The Profit Institute, a provider of outsourced CFO services. Financial management isn't just reading your financial statements. You need to look at your financial decisions with an eye toward the next six, 12 and 18 months of cash flow.

"Entrepreneurs think, 'If I'm selling products and I've got revenue, then I'm going to have cash,'" says Lea Strickland, president of business consulting firm FOCUS Resources, "but that's not necessarily so." Cash is what's in the checkbook you use to pay rent, utilities and payroll. If your bills are due every month and it's taking you 60 or 90 days to receive payment from customers, you're in a bind. Other signs of bad cash flow: Your revenue grows but your bank balance remains flat, inventory is rising faster than sales or you're constantly paying your own bills on the last day or even late. Communication with vendors is key here. Negotiate good terms upfront and be honest if you're having problems, rather than waiting until bills are past due.

The three founders of DMi Partners, an internet marketing firm in Philadelphia, know all about cash flow from their 2003 startup. Launched by James Delaney, 29, Patrick McKenna, 29, and Adam Weil, 31, the company was cash-flow positive in three months by keeping the focus on revenue-producing streams at all times and negotiating positive terms with vendors. Says Delaney, "We were able to find vendors we could work with without a significant capital investment. We could go out and get those leads, sell them to our clients and manage that cash flow accordingly." They built the cash inflows first and then built expenses based on what would generate more cash, earning them eight-figure sales last year.

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.