A company’s cash flow can be more important than the profits or losses that are reported in its financial statements. It is not unusual that a business fails even though it:
- Experiences great demand for its products or services;
- Is profitable;
- Has a promising future.
Sometimes the failure results from a cash-flow crisis. This happens when:
- Rapid growth ties up cash to finance accounts receivable or inventory;
- Accounts receivable or inventory are not managed properly;
- A company is not focused on or managing its cash flow;
- There’s a significant decline in business.
A successful company needs sufficient cash to:
- Meet its capital equipment needs;
- Provide adequate working capital for receivables and inventory;
- Finance research;
- Provide for company expansion and development;
- Withstand downturns in its business.
Your AZSBDC Business Analyst Can Work With You To:
- Discuss with you the advantages and disadvantages of equity versus debt financing;
- Determine the likelihood of succeeding in attracting types of financing;
- Review with you the guidelines that a lender or investor typically considers when making a financing decision.
- Identify lenders who are most likely to accommodate your business’s stage of development and specific situation;
- Define your actual need for financing;
- Assess your ability to repay a loan;
- Make a loan application, including guidance in preparing your business plan and presenting your case to the bank or lender;
- Ensure that you have adequate control over your expenses and cash flow so that the lender has maximum assurance of getting repaid.
- Identify sources of investment;
- Understand the features, advantages and disadvantages of each;
- Prepare financial plans and forecasts;
- Better define your need for financing;
- Create a written business plan that clearly explains your business opportunity;
- Prepare your presentation to potential investors.
- Help you identify and apply for research grants, including the Small Business Innovation Research (SBIR) grants and the Small Business Technology Transfer Research (STTR) grants.
Cash Flow Forecasting
- Help you prepare a cash flow forecast that identifies potential shortfalls and surpluses so that you can plan and react in a timely way.
Cash Flow Management
- Review your operations and offer suggestions to improve your business’s cash flow.
Accounting and Reporting
- Decide which is better: keeping records in-house, or hiring an outside bookkeeper or accountant to publish financial statements and prepare tax returns;
- Get training in accounting and accounting systems if you wish to do the task internally.
Provide you with financial planning templates to help you design and create a short-term (12 months) or long-term (three to five years) plan to:
- Set your business’s own course of growth and operation;
- Set financial targets;
- Test financial scenarios;
- Identify the need for contingency plans.
- Help you set up a process for developing and reviewing a budget that includes planned or expected revenue, cost and expense data detailed for each department and month; provides a control tool to monitor results and take corrective action to keep the company on track; and creates accountability on every level of the organization as department managers create their portions of the budget.