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Your Bank > Education and Advice > CNB University

A Commitment to a Healthy Cash Flow

J Barker
Jeffrey Barker is Senior Vice President - Group Manager and can be reached at JBarker@CNBank.com or (585) 419-0670 x50646.
For richer, for poorer, for better, for worse.  If you own a small business, these familiar wedding vows might signify more than promises to a spouse.  They might describe your relationship with your business as well.  And with good reason if your personal financial well-being is closely tied to how well your business is doing.

A strong cash flow is good for business and good for you.  If your company’s cash flow isn’t as healthy as you’d like it to be, here are some things to consider.

Rely on Reports
What you don’t know can hurt you, especially when it comes to cash flow.  If you’re not already checking them, start generating cash flow and cash balance reports on a monthly basis. If your figures are “off” for even a few months, find out why.  A problem could be lurking.

Market, Market, Market
When things are slow, developing new business opportunities is critical to your cash flow — and perhaps, your company’s survival.  But it’s also critical when things are good.  You can’t afford to be complacent about the future.  If you stop devoting time to growing your business, your success may be short-lived.

Know What Your Personal Finances Can Handle
As a small business owner you have invested your own money into your business.  Establishing a limit of how much of your personal assets you can comfortably invest in your business is vital for you to avoid additional risk to your personal finances.  Your business may encounter periods when cash is needed, and many small business owners instinctively dip into their own personal accounts to help their business.  This could become problematic.  When you have your own business you are responsible for the debts of that business.  It is important to keep this in mind as you evaluate any difficulties that may arise.  If you just go for a quick fix to a problem and don’t look for the cause, you are sure to encounter trouble.  Evaluating issues and making adjustments will have better results than perpetuating things with a quick fix.  Though it is not an easy fact to acknowledge, sometimes the adjustment is closing the business.  Continuing to put your own personal assets into your business, when it is above what you can comfortably handle can lead to financial failure for your business and you personally.

Create a Credit Line
Even if you’re doing everything right, you could still hit a rough patch.  Or, an opportunity might come up that requires some quick financial maneuvering.  Instead of using your own money, consider using a line of credit.  For maximum flexibility, establish a line of credit for your business before you need it.  If you wait to apply until you’re in a bind or a hurry, you might be turned down.

Wedded Bliss
If your personal and business finances are intertwined, your planning should integrate the two.  We’d be happy to review your situation with you.

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