#1 - Not knowing your cashflow

One of our biggest jobs as business owners is to make sure we always have enough cash on hand. Do you know how much money your business makes and spends each month? If not, it might be time to get familiar with your company’s cash flow. A healthy cash flow means you’ll be able to pay expenses when they come due and avoid incurring debt or bouncing checks. It also helps you avoid many other common financing mistakes.

The best way to start getting a handle on your cash flow is by tracking income and expenses for at least two months, preferably four months. There are plenty of resources available—even online tools (hint: Google free small business accounting software)—to help you calculate your cash flow. Just remember that there are many different ways to track revenue and expenses; it’s important to use consistent methodologies across time periods so you can see how much money you make or lose on average each month or quarter.

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