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Cash Flow

 


If we don't change the direction we're going,
we're likely to end up where we're headed.

Ancient Chinese Proverb
 

 

Cash Flow is considered by many as the "most" important financial attribute that determines the success or failure of a business or an individual.  You can have the best products, service and marketing but if you do not manage your cash flow correctly you will go out of business or bankrupt.  In fact this is probably the single most common issue that causes businesses and individuals to fail financially. 

From a business or individuals point of view a negative cash flow basically means you are spending more "cash" than you are receiving.  If this happens for very long you will go out of business or go bankrupt.

Positive cash flow is cash coming to you (not orders but cash) from someone else.

Having high margin products will not provide a positive cash flow.  Also, having a high paying job does not mean having a positive cash flow.

For Example: 

Suppose a business has great products, very good profit margins and is located in a good area.  However, the owner buys way to much inventory (negative cash flow) and sales (positive cash flow) do not overtake the negative cash flow.  If sufficient cash reserves are not present the business will become bankrupt.

For an individual a similar situation is possible, even with a good income.  Suppose someone purchases and big home (i.e. big mortgage payments), an expensive car (big payments) a nice vacation home, college for children etc.  Eventually their cash flow "out" may exceed their cash flow "in" and they may have to file bankruptcy.

A record number of personal and business bankruptcies have taken place.  Most personal bankruptcies could have been avoided with just an additional $400 per month in income.

Positive Cash Flow is much easier to maintain using the Business Income Opportunities that I have presented.  Why?  Because the initial cost is low, if managed correctly one should be able to start increasing their income far beyond the cash needed to conduct the business.

 

 

 

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