Cash is King! The life blood of any business is its ability to collect cash and pay bills as well as pay its employees, particularly its owners. Too often small businesses are profitable, but they do not have enough operating capital to meet their current needs. Consequently, they may be forced to sell out to a stronger competitor, sell a portion of the business to investors at an undesirable price or close the doors and cease trading. None of these alternatives are typically what the owners intended when starting the business.

The ability to forecast cash resources and uses is an art and is by no means a well defined science. None of us have a crystal ball and any cash forecast which is prepared by the management of a company or an outside consultant can be no more than a guess as to when the customers pay and when your business will pay its obligations. Hopefully, the more effort that is put into cash forecasting the better will be the educated guess and the more accurate the resultant picture of the future operations of your business.

Also in this chapter of the New Business Kit:

• Starting the Analysis
• Cash Collections
• Disbursements
• Cash Flow Worksheet

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