Will Cash Flow Problems Kill Your Business, Too?

Cash flow is about how much cash you can lay your hands on at any time. You may have made 200% profit on the goods you have supplied but it only affects your cash flow when you have the money in your hand.

Cash flow problems kill many start-up businesses, particularly those that are selling to other businesses.

All businesses put off paying bills as long as they can so that their own cash flow is better. Your sales to other businesses carry two risks:

  • That the business may go bust and never pay you, meaning you could go bust too if it is a large invoice
  • That payments of your invoices will be delayed, meaning your available cash is reduced

How to Avoid Cash Flow Problems

1.      Market Your Services or Products to Consumers

Consumers expect to pay for their goods or services immediately, in cash. Your risk is reduced to almost zero. If consumers do not pay cash then they do not get the goods and you can sell them to someone else. If your business is a service-based one then ensure that you are paid frequently so your risk is reduced to the hours that you worked on a job.

If you do sell to other businesses then be very careful about the credit terms you extend. If you offer a discount for prompt payment you will find your invoices are paid sooner, just factor the discount into the price you quote in the first place.

2.      Ask for Cash

Expect to be paid in cash immediately rather than in favors or goods; you can only pay your own bills with cash.

3.      Keep Records

Look up how much cash you had at the end of each of the past six months. In a healthy business this amount of available cash will show an increasing trend, this is called positive cash flow. If the amounts are getting smaller then you have negative cash flow and a problem that you need to get a hold of.

4.      Plan Ahead

You know when your tax bills are due. Make sure that you have enough cash on hand to pay them. If you spend every cent that comes in and have nothing left for the government, your business will soon be at an end. Work with an accountant to predict your tax liability.

5.      Delay Your Own Payments

If an invoice says payment due in 21 days NEVER pay it immediately. The extra cash sits in your pocket for that 21 day period and increases your liquidity, possibly preventing you from going into the red.

cash flow

6.      Invoice Factoring

This is where you sell your invoices to a bank. Usually you get around 75% of the invoice amount immediately and another 10-20% when the invoice is paid. The bank takes a small cut for providing the service and carrying the risk.

You can factor all your invoices or just the ones that are proving troublesome to collect on. Overdue invoices carry a larger risk for the bank, so you will have to pay more if you only use a factoring service for invoices that are overdue.

I was an Internet Marketing Sucker

Are you tempted by all the Internet marketing emails and ads you see? I was, and I spent $2,000 in just one year chasing the dream.

I am not proud of my stupidity but perhaps I can help you to avoid the same mistakes I made.

What Is Internet Marketing?

You have probably seen the ads for the dream lifestyle that goes with being an Internet marketer. The reality is very different.

The people selling the dream are leeches: They suck the money out of your credit card account and give you nothing back. They sell you a silver bullet solution that promises a fortune for zero effort in just a few weeks.

Internet marketing silver bullet

The silver bullet only costs $47, a reasonable amount for the key to riches, so people buy it. I did, too. It’s like a lottery ticket, except that you have less chance of coming out in profit.

When the silver bullet doesn’t work, you think you must have done something wrong, so you still buy the next “better” silver bullet when you see that a few weeks later.

What about all those “proofs of income”? That is because they have sold thousands of silver bullets and pulled in lots of suckers who hope to change their lives with a $47 “investment”.

Why Doesn’t It Work?

There are two main reasons why none of these get rich quick silver bullet schemes work.

  • They get rich selling the idea to you; who are you going to sell it to? You have no email list to pester every day, no hot prospects to sell to
  • They only ever give you half what you need. If they gave you the whole package for some ridiculously small sum then you would be competing with them . . .

 

Do You Even Want to be a Leech?

Have you a conscience? If you have then forget all these silver bullet plans that steal money from people under false pretences. Do you want to steal their dreams?

Why Was I a Sucker for so Long?

I am an optimist and always believe the best of people. I really wanted money in my bank account. I was prepared to work for it, too. I kept thinking that I must be doing something wrong and kept buying the next, even better silver bullet that came along.

I also suffered from “information overload”. These programs were coming at me so thick and fast, every one with a very limited deadline that I just yanked my credit card out and paid, so I did not miss the boat. I had 30 emails a day with “learning”, “education programs” and the like. I needed 28 hours a day just to take in all that information. Paying for the next silver bullet was a way of alleviating the stress I felt.

I also needed backup plans. I had so many backup options I could not even remember what they were.

Is it Possible to Make Money Online?

I am doing it.

Not from any of the silver bullet plans I bought, but by hard graft.

I am not going to show you photocopies of my bank statements or PayPal account because I have no need to do so. I am not trying to sell you anything, so I don’t need to prove anything.

I work hard. I start at 5am most mornings, sometimes as early as 2am. I work through the day until 8pm and go to bed at 9pm. I have an hour off here and there through the day but basically work an average 14 hour day, 7 days a week.

What Do I Do?

I write articles and edit others’ articles for a living. It started slowly as I built my reputation and developed relationships. Some relationships became profitable business relationships as people came to trust me. I earn my money by providing services to people who need them. I will never be rich, but it’s a job with lots of advantages:

  • I choose who I work with
  • I don’t need a car because I no longer drive an hour each way to work
  • I work hours that I choose
  • I enjoy most of what I do
  • I can grow my business by outsourcing more

Could You Make Money Online?

Yes, if you have a service to sell that others need. Forget all the silver bullet plans and Internet Marketing hype.

The Internet is a worldwide marketplace. I live in Ireland and sell my services worldwide. I have clients in the UK, USA, Canada, Australia and India. You could do the same . . .

Have you wasted money buying Internet Marketing hype?

Have you any skills that people will pay you for?

Please leave your comments and your own experiences below. Your email address is never published.

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