Get a Grip on Expenses

Controlling costs is at least as important as increasing revenues. Just because you’re bringing in business doesn’t guarantee that you’re making money.

Pay attention

Here are two rules that will serve you well:

• Keep an expense journal with you at all times and write down everything you spend, every day.
• Tie every business expense to a project. For every $100 you spend, you’ll need to bring in $150 in sales just to break even.

Learn new skills

• Learn the difference between profits and income, between revenues and cash. You can be making sales like crazy and go broke.
• Learn how to create and understand a cash flow analysis.

Read up

Understanding Cash Flow by Franklin J. Plewa and George T. Friedlob. Good examples of tools for learning cash flow analysis. Descriptions can be a bit technical for some people.

Small Business Cash Flow: Strategies for Making Your Business a Financial Success by Denise O’Berry. Good basic book on cash flow management for small business.

Cash Flow Problem Solver by Bryan E. Milling. This book is out of print but you can find copies on the various used book sites. It gives real-world examples of cash flow problems in small businesses and how to solve them.

Ask for help

You can also get advice from a SCORE volunteer or a paid business advisor.

Learning how to do a cash flow projection isn’t difficult, but it will change the way you think about your business.