![]() Over-reliance on one stream of income or cash flow can end up being a major risk to a business-as has been seen with Covid, which has had a very uneven impact on the economy. Thankfully, diversifying into products or services that create residual revenue can help offset any shortsighted hiccups where cash flow risk is prevalent. With events becoming part of our business, we are forced to stay away from the trap of paying for next week’s event with next month’s event money. ![]() Build Residual Revenue Through DiversificationĬash flow can often get away from you. This may not be a traditional bank or financial institution but instead a payment processor or other partner. When financing is required, it’s important to look for innovative partners with responsible terms. By accurately managing inflow and outflow, business owners can forecast cash and identify the right time to look for financing. Use Your Cash Forecast To Identify When To Seek FinancingĬash flow is critical for obtaining financing and growing your business. Instead, reduce contract labor and redistribute work among your permanent workforce. When labor is a significant cost, consider reducing spend to avoid situations where layoffs are required. One way to mitigate risk is by reducing variable costs to reduce cash outflows. Maintaining adequate income is necessary for survival, and increasing it is the key to growing your business. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms.
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