Cash is the lifeblood of any business. It doesn't matter what you do; what you sell; how well or poorly you do it; how profitably you do it; or how effective your organisation is. As long as you have cash, you're alive. No matter how wonderful you firm or idea is, nor how much money you make doing it - the day you run out of cash your business dies.

This means that cash flow management is about the most important thing you as captain should ever do. Imagine leaving harbour with your ship's fuel tanks almost empty? Chances are you're going to run out of gas somewhere in the middle of the ocean. That's bad enough - but if it's right in the middle of a storm chances are you're on a one way ticket to that great harbour in the sky...

Almost every request I get for help in this area comes from an entrepreneurial captain somewhere in the middle of the biggest storm in the biggest ocean ever! At which time it's often a little late! Usually at this time our hero is so overwhelmed by the problems that he's not thinking straight [if at all] so he misses a range of opportunities.

In 18 years of running my own businesses; creating 5 startups from scratch with no capital; personally consulting with 1.500 business owners in a wide variety of businesses; and presenting seminars to 12,500 entrepreneurs I have looked at a huge range of cashflow challenges. And I have done a lot of reading on the subject. I don't have all the answers, but most of the time we business owners overlook a wide range of options - available to almost everyone - that will make our lives much, much easier. Simply because we're too busy!

So if I tell you that there are about 101 ways to improve your cash flow, chances are you'll laugh. I'd like to share a few of the more exotic with you right now. The rest are available at my new seminar - the Finding Cash Seminar. You can reserve a seat by clicking on a link at the end of this article.

Imagine, for a moment, that your business is like a dam, and cash is like water [the way it evaporates that's probably pretty close]. Just as a dam exists to accumulate the water in a reservoir, so does your business exist to accumulate cash. The dam uses it's water to generate hydroelectricity or as a store for people to use the water. It can't generate electricity if there is no water. Your business uses the cash to pay suppliers and staff and the receiver and local government and the bank and yourself.

Apart from the daily need for cash [we call that working capital to confuse you] we also need cash to buy a business; start up a business; expand our business; contract our business; or go out of business. But when we're looking for more cash we tend to only go to our bankers for help. This is a huge problem because we confuse our need for cash with the bank's availability of product.

Banks offer business finance in a few very restricted ways - term loans, overdraft, asset finance, invoice factoring, and a few other variants on these same themes. In each case you sign away your personal life as part of the deal. Because these products are well advertised and pretty traditional, we assume that they're the only way to get cash. Most of us never look inwards - at either ourselves or our businesses - to identify other sources of cash. As soon as we have a solution to our immediate problem - any solution - we stop looking for more ideas and go back to the engine room!

Much of the work I have done these past 8 years in helping folk has been the pursuit of cash. Sometimes the business didn't need more cash - it really did need to close down because it wasn't working. But you'll be stunned at the various places cash hides in your firm, as well as the places cash gets lost.

In South Africa, for example, with our high levels of integrity [cynical grin] many of the closures I have seen have been caused by a partner, accountant or staff member dashing off with the cash. Despite knowing it can happen - most of us have no routines in place to keep track of the cash.

Similarly, for a time your cash is invested in your stock. And if your stock is walking out the door without going past a till - you're headed for a drought. Yet most of us have awfully lax routines in place to track stock.

Isn't it interesting how we all 'trust' our staff - even though in the same breath we 'know' that they're incompetent? [Don't flame me - I see it but I don't understand it.]

© Peter Carruthers, www.petesweekly.co.za

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