Operating a business without a cash reserve safety net results in sleepless nights and never-ending stress. The choice before you is to stop the profit losses that keep your business at risk or continue to roll the dice that you will have sufficient cash inflows to cover your cash outflows in the coming days, weeks, and months.
Overview
People bet and play games of chance, hoping to increase the money they have. Gamblers are always ready to take risky action in the hope of a payoff from their bet.
Business owners who are undercapitalized are gambling with the investment they have made in their business. Anytime you have insufficient cash reserves and no working “capital cushion” for unforeseen events, you have put your business at unnecessary risk.
The reality is most business owners do just this. The problem is that those who operate their business with little-to-no margin for error, between making a mistake—which can happen to anyone—and going out of business because you run out of cash, make most things done in the business a gamble. Trying to run your business on the bet that you can collect the money owed you before those collecting from you get all your money is no way to run a business.
BusinessCPR™ or B-CPR involves managing the relationship between Cash flow, Profits, and Reporting. It is a five-step management system for improving cash flow from profits. Business cash equates to the blood flowing through our bodies; profits equate to the heart pumping blood to vital organs and tissues; reporting effectively on all business parts equates to how our nervous system sends and receives essential and timely messages.
Understanding the relationships between your cash flow, profits, and financial reporting is the best way to protect your business from failure. Reduce the inherent risk in your business by making more money in your business. Do this by consistently applying the principles of the BusinessCPR™ Management System to have a profitable business with predictable cash flow, so you aren’t gambling with your equity.