As an internet entrepreneur, you are managing a business that requires you to manage your cash flow. Managing your cash flow is an important task and not to be neglected. It will aid your business to soar to greater heights or fall from grace.
Weigh the Opportunity Cost
During the first few month or even years, your start-up or internet business will be generating little to no profit. You would most likely be working for free, being the owner of your business. Most start-up or internet entrepreneurs will be faced with the same problem, tight cash flow. Naturally, most people will tend to save cost by selecting the cheapest offerings or product. It is not wrong to select the cheapest but I would recommend you to weigh the opportunity cost of the spending. There are some task and projects which are suitable for cost reduction and some not so appropriate.
Quoting an example: If your company is promoting high end software for sale, in a bid to save cost you signed up low priced hosting that makes your site loads slowly and crashes many times in a month. Before even trying your product or look at the pricing, your clients would most probably not have much confidence in your product.
As a business consultant, it is my recommendation that you ensure the decisions made be inline with your company goal and objective
You do not have to be an accountant or finance person to manage your cash flow well. It is all about planning ahead, it does not matter how well or bad you are currently doing, sometimes it makes a huge difference if you are able to pull through the difficult time by hanging in there and just be in operation before the next big break comes along. Therefore, managing your finances well is very important. Plan ahead by generating a report on when and how much funds are coming in and which period to take note of when cash flow are low.
Some companies do not keep track of their finances and they tend to stretch their finances to the maximum. A business coach can help you be accountable. A company generating negative cash flow could risk the chance of getting into liquidation. It is always good to have back-up funds ready so when there is a essential need for the funds, you would be prepared. With strong cash flow, you would be able to carry out your expansion plan smoothly. Or during any difficult period, these back-up funds might just be your life boat.
I hope the above pointers mentioned will help you better in managing your cash flow. With a healthy cash flow and sound financial decision you should be able to manage your company well.