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Overcoming Business Financial Troubles

Feb 26, 2008
If you were having problems with your personal finances you would sit down and figure what you have coming in, what bills you owe, what you can go without in every way and what you must have in order to basically survive.

This is what you have to be able to do while your business is going through a rough period. The economy has been in a depression or recession, depending on whom you ask for many months. The questions are whether the recovery will come soon enough?

From the largest corporation to the smallest individual shop owner the calculation is the same. Can I find a way to bring in more money? How can I reduce expenditures even more? How much longer can I keep the business afloat? Will that be long enough? How many months away is the recovery?

If you have been asking yourself some of these questions and then you need assistance. Let's see if there is any kind of a formula that might help.

We'll start with your cash on hand. This includes the money in bank accounts, petty cash, and other cash on hand. Add to that any you expect to realistically receive.

The other key to the formula is the outgo of funds. Be sure to add all your monthly expenses into your outgo calculation. A good way to be sure is to go back through the business checkbook for the past several months.

You also need to add to the monthly outgo rate, a portion of any longer-term expenses such as quarterly payments, tax assessments, etc. so your formula is exact.

You then divide your cash plus income by your monthly outgo. For an example, if you have $1500 in the bank and expect to receive $500 each month you can expect to stay in business for three months if your outgo is $1000 per month.

Obviously, you want to do everything you can to increase your income. A small business can take advantage of discounts on invoices for prompt payment upon receipt. Do this during the good times and you will have extra to carry you through the bad times.

If you make it a point of paying your invoices on time, you might have a small cushion when you really need it from your creditors. If you are always paying late, well, forget that! Hold off on all new purchases and make due with what you presently have.

Some businesses report they are now beginning to see the light at the end of the tunnel. And the question is when will others see it and when will others be able to quit their second job?
About the Author
Court teaches people about success on his site: writetoright.com and helps people get the best results from their internet marketing on whalehook.com.
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