The virtues of a heathy cash flow
All business owners want to have healthy cash flows but what does a “healthy cash flow” really mean?
A positive cash flow simply means more cash flows into your business bank account than out of it, which is essential for a company to sustain long-term growth.
A consistently negative cash flow puts a company in serious jeopardy, even though many organisations in growth mode routinely burn through more money than they bring in. Regardless, you can’t sustain growth without cash; it will eventually catch up to you.
However, a healthy cash flow isn’t simply earning more than you spend, nor is it about sitting on a pile of cash. It’s about ensuring your business can react to new opportunities quickly and without breaking the bank — meaning it’s key to your short- and long-term growth.
Five keys to sustained company growth and where cash flow fits into It all
Here are a few tips for helping ensure your business sustains growth and why a healthy cash flow is the most crucial element of all.
1. Invest in your employees
Do whatever you can to keep the great employees you have because you can’t grow without them. Even if doing so requires spending a little bit more, it’s less expensive than having to find, hire and train new staff.
2. Invest in solid financial relationships with your suppliers.
Without a reliable and loyal supply chain, you can’t deliver to your existing customers, much less expand into exciting new markets.
3. Invest in the right technology at the right time
There are plenty of technologies to automate or simplify processes, make operations more efficient and focus your employees on higher-value business goals. Just don’t wait until there’s a crisis to invest in. (Automation, collaboration and remote-work infrastructure saved many a company during the pandemic.)
4. Invest in new opportunities when they present themselves.
You can never predict when the next big thing will turn up. When the opportunity for unexpected growth comes along, don’t be afraid to go for it.
5. Most importantly, work toward a healthy, positive cash flow.
Maintaining a positive cash flow provides the freedom and flexibility to adapt to changing market conditions without relying on new loans from banks and other investors.
Of course, you’ve always got to invest your cash wisely, but do it so that it’s always working toward revenue growth. Once revenue is heading in the right direction, you should be able to achieve a positive cash flow, which can then kickstart a cycle of sustained company growth.
We can help with your cash flow
As a cash flow and debt management agency we can work with you to ensure you have the right policies and procedures in place so your cash flow is better protected.
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