Negative cash projectionsQuestion How do I deal with negative cash projections in my business plan?
Answer First, make sure that the business works, and that it is worth pursuing. Negative cash projections is a major indication that you might not want to pursue that business opportunity.
Is your business plan warning you that you're charging too little? Take a good look at your underlying assumptions to make sure you aren't under-pricing your product or service. Find out if customers will pay more for what you offer, or find a way to get them to. Also, check to make sure you aren't spending to much on production costs or expenses. If you decide you have a worthwhile business but not enough cash, that's a different problem. Profitable businesses can go broke if they don't have enough working capital to support receivables, inventory, and the other assorted plagues of cash flow. Search this site for topics that address the impact of receivables and inventory on cash flow, as well as how to raise money for a start-up business.
Brain Trust contributor:
Author of Hurdle: The Book on Business Planning
President, Palo Alto Software
Related Categories: Accounting, Finance, Taxes, Business Planning, Cash Managment, Marketing, Branding, Advertising
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