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Do you enforce positive cash flow?

by Andyhenry
7 replies
Hi Warriors,

There seem to be a lot of people that come to the forum and are spending more on buying IM products than they're making with their business.

Cashflow is so often overlooked by businesses (they focus on revenue or growth) that they end up failing because although they may have big orders, they can't buy stock or their invoices aren't paid on time.

Since the barriers to entering IM and starting an online business, there's not really any good reason for being cashflow negative, but it appears to happen so often.

So - Do you pay attention to cashflow? (outgoings equal or less than income)?

Fill in the poll and we'll get an idea of how people are focused.


Andy
#cash #enforce #flow #positive
  • Profile picture of the author Sean A McAlister
    Hey Andy,

    this is a crucial aspect to
    fiscal fitness with any business
    and one that should be discussed
    great that you brought it up.

    I use Quick Books for all
    my books and don't know where
    I would be without it.

    Another important aspect
    when discussing cashflow is
    properly documenting all of your
    expenses as they pertain to
    your business. If you are running
    a IM business you should keep
    all receipts of your purchases as
    they are tax deductions.

    The same applies if you are
    working from your home. The
    Feds allow you to write off the percentage
    of square footage you are using
    as your office. You can incorporate
    your utility bills, mortgage or rent
    etc. The percentage is relative to
    the square footage.

    If your expenses do not exceed your
    standard deduction already given by the
    Gov then it is a moot point but it is still
    a good practice to get into.


    Forecasting and Budgeting are the pinnacle
    attributes to a businesses bottom line.

    Profit and Loss (P&L) management is
    essential.
    Cash flow is vital and you need to
    count the pennies to be able to
    spend the dollars.

    Every decision I make incorporates
    an acute awareness with my cash flow
    position.

    Good stuff.
    Sean
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    • Profile picture of the author sknollii
      This seems to be the bane of SO many people here.

      One of the reasons good old Rich Schefren was able to pull off the huge launch he did a few years ago was that his IM Manifesto spoke so very loudly and personally to the fact that most people trying to do business on the Internet are not treating their business at all like a Business.

      That report had tens of thousands of people saying "Damn... that is exactly what I am doing (meaning being a serial opportunist and not a business person).

      Good post Andy.

      Onward & Upward!

      Sam
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      • Profile picture of the author GailTrahd
        I actually use Excel - had it for years and never learned the easier Quick Books! I keep tabs every month and try to keep spending to a minimum. There are regular business expenses - can't do without my writers and aweber!
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        • Profile picture of the author Andyhenry
          Originally Posted by GailTrahd View Post

          I actually use Excel - had it for years and never learned the easier Quick Books! I keep tabs every month and try to keep spending to a minimum. There are regular business expenses - can't do without my writers and aweber!
          I've been wondering whether all the money I spend on books and coffee are business expenses after all they do educate me and keep my mind active so I can take in the information more effectively
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          nothing to see here.

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          • Profile picture of the author jhongren
            Similar to Gail, I keep a spreadsheet. I make sure I have positive growth at the end of the month.

            Beside monetary cash growth, I also make sure my team mates grow.

            10% is always reinvested back to buy good products to make sure we learn more.

            Another 10% is to grow our energy and we have a good meal to celebrate the hard work for that month.

            Another 10% is used to reinvest to grow our business like investing in softwares, outsourcing and so on.

            So I see positive growth in more than cash flow alone.

            Cheers,
            John
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    • Profile picture of the author Jelasco
      Originally Posted by The IM Reporter View Post

      The same applies if you are
      working from your home. The
      Feds allow you to write off the percentage
      of square footage you are using
      as your office. You can incorporate
      your utility bills, mortgage or rent
      etc. The percentage is relative to
      the square footage.
      Yes, and that deduction is also one of the top audit triggers.

      I don't think it's worth it for the small tax savings.
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      • Profile picture of the author JohnMcCabe
        Do I pay attention to cash flow?

        Abso-freaking-lutely!

        Do I enforce positive cash flow?

        Over the long term, yes. Over the short term, not always. Sometimes I'll go into the red for a short time if I see a large potential payoff later. Like upgrading audio/video equipment, for example. I made the capital investment, and between increased income and depreciation, it will pay for itself, even though I had to dip into personal funds and loan the business some money for the buy.
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