The diary of a biznessvirgin – Dear entrepreneur ,Cash is king

It took losing my seed capital to understand the statement “Cash is king “.

My very first business involved making supplies to companies,items supplied were taken on credit with a 2-3 week timeline for payment , most of the companies always defaulted.It took them as long as 3 months to pay up ,in some cases then, i made multiple supplies to the same company on credit . The delays never bothered me , at that time i was trading with sufficient funds so i simply treated it as a case of outstanding debts.
After a while it became difficult to expand the business, serve the few companies that paid on time ,it also became almost impossible to pay the bills within the business.

Cashflow in business
photo credit : www.gtmediaproductions.com

Cash management is important to every business.The consequences of not understanding cash management in business can be disastrous, i learnt this the hard way. In few words, a business that is out of cash will most likely be out of business.
Personally,the 3 cash management habits i consciouly practice are
– paying attention to all my costs and expenses
– closely monitoring turnover and avoiding credit sales ; in my kind of business,the margins are low so its all about volumes and rate of turnover)
– collecting and evaluating data regularly; this basically lets me know how my business is doing and how to effectively focus to earn more money

Here are 3 posts to give you a good understanding of cash management in business

1) Dealing with cash flow problems in business https://biznessvirgins.blogspot.com.ng/2016/06/business-clinic-dealing-with-cash-flow.html

2) Cost management tips for SMEs https://biznessvirgins.blogspot.com.ng/2016/06/money-management-tips-for-smes.html

3) Understand basic business terms for book keeping https://biznessvirgins.blogspot.com.ng/2016/06/money-management-tips-for-smes.html

F.O is in business to make money and F.O bears this in mind always – CASH IS KING

Yours truly,
F.O (The Entrepreneur)

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