Cash flow and the upcoming election makes me nervous—for my business and my clients’. Elections bring an unsettled economy. It doesn’t matter if an incumbent party wins or not. Change is inevitable.
What do you do with cash flow in your business when you feel nervous?
Do you hold back on timely payments to vendors?
Are staff reductions contemplated?
Do you shift product offerings?
Or will you move ahead with bold objectives and investments?
Keep a watchful eye to understand a business’s cash flow concerns.
Watching over your business or having a trusted manager that does is key. Funds coming in and out of a business are dependent upon customers and vendors. Are your customers dependable? Are they timely with payments? They need to be for a business to succeed.
If cash is short, know how that happened. Look at historical financial data and customer behavior. Does your business provide discounts that aren’t factored into budgeting numbers? Do you count on all items being sold at full retail price? If the full retail price is expected but not realized, that situation is sure to create cash shortfalls.
Are you considering how the election outcome will affect your business? Don’t be caught off-guard.
Take time to consider what changes might be possible. Some changes may not be predictable. However, some may.
Will your product offering rise in cost due to increased transportation expenses? Will the minimum wage and associated taxation costs increase significantly within the next year? Is your anticipated income expected to increase to align with potential costs?
What about a drop in sales? A prolonged decrease in sales without a reduction in expenses leads to reduced cash. That can have devastating long-term consequences on a business. Monitor sales trends and adjust accordingly. Eliminate unnecessary expenses. Be proactive in response to a changing economy.
Is frequent short-term borrowing a necessity in your business? If the economy contracts borrowing may become unavailable, or too costly. Will that result in tighter credit controls for your customers?
Anticipate discussions with your customers and creditors. Explain any negative economic realities that your business is facing.
Transparency leads to understanding. Communicate and maintain your financial integrity for future success.
- Stay informed about political and industry trends.
- Be proactive about changes in your business.
- Know your numbers.
Cash flow challenges and economic changes can be overcome with diligence. Be diligent. Don’t be so nervous that your judgment is clouded. If you have a pulse on your business and are willing to make necessary changes, cash flow challenges can be minimized.