Often as a business owner people assume we have more money than have. People often think we are rich when in fact so often our employees or suppliers make more than we do. Unlike the people we provide for our incomes are not steady and in fact our revenue is based not on the work we do as much as the solutions (be they good or services) we supply. Our true money is made because of our brains as such keeping a clear head is important.
This global economy has affected me and yet I am working to position myself such that to survive. Focusing on things that generate revenue and people committed to helping me and cutting loose of those things and people who are not. Reducing and eliminating expenses and working on generating more revenue.
Cash flow is important ant and mastering how it works for any business is important. For money to flow (like a river) there must be streams feeding it and it is important to create enough streams such that barring a catastrophic event your reviver is always supplied with fresh water (cash). Further the discharge should not be drained faster than the inflow or the river will eventually dry up.
On a personal note my goals are to erase my debts by the end of the 3rd qtr 2009 and by 4th quarter 2010 have 6 months of cash reserve.
- A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing - although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance.
- An accounting statement called the "statement of cash flows", which shows the amount of cash generated and used by a company in a given period. It is calculated by adding non cash charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project, or to a business as a whole. Cash flow can be used as an indication of a company's financial strength.
Investopedia explains Cash Flow
- In business as in personal finance, cash flows are essential to solvency. They can be presented as a record of something that has happened in the past, such as the sale of a particular product, or forecasted into the future, representing what a business or a person expects to take in and to spend. Cash flow is crucial to an entity's survival. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If a business or person does not have enough cash to support its operations, it is said to be insolvent, and a likely candidate for bankruptcy should the insolvency continue.
- The statement of a business's cash flows is often used by analysts to gauge financial performance. Companies with ample cash on hand are able to invest the cash back into the business in order to generate more cash and profit.
Definition - A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization.
|
| Pay yourself every payday | |
|
| Create space in your budget to save Calculate how you can reach your savings goal |
| Cultivate a rainy-day account | |
|
| How to build an emergency fund 15 simple ways to stretch your budget |
| Invest your savings wisely | |
|
| Know your savings products Earn the best yield on your savings Choosing between a CD or a money market |
Also suggest reading 10 Steps to Building a Complete Financial Portfolio
No comments:
Post a Comment