Where Does Your Business Income Go?

Is there any way to think about cashflow and your business other than as a critical resource you can’t survive without? Cash keeps the lights on, the doors open, and the paychecks coming. A lack of cash slows down your business, keeps you up at night, and can ultimately create a mountain of debt that you can’t sustain.

When things are booming and the money is coming in the door fast and furious, it’s easy to let things slip. After all, there’s plenty of money to pay the bills. On the other hand though, once things slow down and money becomes tighter, there’s not as much room for “letting things slip” anymore.

I was thinking about that late last week. I had just wrapped up a project and was having a quiet, “administrative” day, where I reviewed financial records and generally caught up on how the business was doing overall. Having that time allowed me to take a look at where we were spending money, and if there was any excess that could be cut.

What I found surprised me. For example, I knew the phone bill was high, but I attributed that to the amount of international business we do. Someone’s always on the phone to England, Canada or elsewhere, and no matter what cellphone plan you’re using those costs add up quickly. But when I reviewed the bill carefully, I found about $100 worth of extras that we didn’t need any longer … and hadn’t needed for some time. Yet we’ve been paying that phone bill, month after month … I also found a monthly postage service we stopped using in the summer of last year, an online backup system we tried but didn’t care for, a search engine service we weren’t using … and so on. By the end of my analysis, the business was up a few hundred a month. It’s not earth-shattering, but it’s not chicken feed, either.

I guess if there’s a lesson in all of this, it’s this: find the space and time to keep an eye on where your business income is going. You’re going to try all kinds of things in the early days, with varying rates of success. A periodic review can help you catch and cancel recurring payments for services you aren’t using, putting that cash back in your pocket.

Actively monitoring your business’s financial position is a healthy step towards financial empowerment. Take a look at Chapter 11 of Smart Business Stupid Business. You’ll find the 5 levels of financial accountability and what it takes to reach each level.