When you're in business, it is important to keep focused on getting money coming into your doors. And when you're in a Recession, it can mean the life or death of your business. It's literally that important. So, we're going to discuss how a business owner goes about deciphering the unique and specific manner in which Cash Flow is produced in his or her business.
As a business owner, entrepreneur, or professional, one thing is certain. You must be absolutely clear about what drives money into your doors. That is, if you want to survive in economic downturns. Therefore, when you review your own business operations, what specific product, activity, or service produces money for you? The answer to this question is important for any business to stay afloat, but it is especially critical when facing a Recession. And as you well know by now, your economic survival in a Recession depends in large part on a steady production of Cash Flow in your business.
So then, let's answer this question:
"How does your business make money, even in a Recession?"
Many business owners answer that question by claiming it's the type of products and services they sell. Others believe it's the total amount of sales that they can make in a given period. Still some argument it's the amount of customers and clients they have. In part, all three of these responses are technically correct answers. But, in order to create an operating system in your business that produces a steady stream of Cash Flow consistently, you will need to do some studying. You're going to have to look at your business from a banker's point of view. And we all know what bankers ask you when you go in to apply for a loan …,
"Show me the money!"
In order for you to know and then be able to show where your money is coming from in your business, first determine what specific process your unique business employs to produce Cash Flow. Why is making that determination so important? The answer lies in this statement:
Every business produces Cash Flow in a unique and particular way.
Can you state in what way Cash Flow is produced in your business? You should know the answer to that question. And to help you out, we've listed them here.
In most businesses, there are seven primary channels of Cash Flow production.
Which of the seven Cash Flow production channels below are unique to your business operations ?:
1. Cash Flow by bringing in more customers.
2. Cash Flow from increasing the amount of sales per customer
3. Cash Flow by increasing the number of sales per customer
4. Cash Flow from sales of products
5. Cash Flow from sales of services
6. Cash Flow from a combination of sales of products and services
7. Cash Flow from an increase in price, or billable hours (the favorite of attorneys!)
Your particular business may employ several of the Cash Flow production channels.
But always remember. What's important is that a business owner knows the specific way Cash Flow is produced in his or her business. Remember that one kind of business may produce Cash Flow differently from another. In fact, Cash Flow may come faster to one business using one particular method than it does for another business using the same method. Why is that? Because, every business possesses a unique and different category of customers, products, services, and staff. And each of these factors plays a role in the consistent production of cash flow in your business. It may even be the same kind of product or service being sold, yet each particular business delivers their product or service to their customers in a unique way. And each one does so differently.
Finding your best method of producing Cash Flow is absolutely essential to sustaining the life of your business. Especially when you're facing a Recession! Furthermore, studies show that most new businesses fail in their first few years due to a lack of sustaining Cash Flow. And most pertinently, I found from consulting with hundreds of businesses over the years that unsuccessful businesses lacked Cash Flow due to one primary reason:
They failed to have precise and practical knowledge about their business' unique method of Cash Flow production.
Do not let that be you and your business!
And it will not be if you will take some time now to review which of the seven typical examples of Cash Flow production your business employs. Then spend the majority of your day keeping yourself and your staff focused on those primary channels of Cash Flow production.
Always remember the mantra, "Cash Flow is King!"
Armed with this knowledge, you will once and for all get a handle on Cash Flow in your business. And knowing this crucial piece of information, you will be in the best position to set up systems within your business to ensure that Cash Flow is being manufactured consistently using the best manner of production unique to your business …, even if you're in a Recession!
Copyright 2009. Miguel A. Mendez, Jr. All rights reserved.