Cash flow is the money flowing in and out of operating your rental property. Many investors live by the positive cash flow generated from the rentals. You can use the following very simple formula to calculate cash flow. Even before buying a property, you can estimate the cash flow to determine if the property is a good investment. In another article, we also discuss a modified formula that factors in tax deduction, which gives you a true cash flow because of the tax savings allowed by the IRS.
Customers do not pay for what they have not yet been billed. Although many owners believe they have efficient billing procedures our experience is that delayed ordina billing is a primary cause of poor cash flow. You cannot bill soon enough!
Use budgeting and financial analysis tools to do “what if” analysis. Using your financial and budgeting software to help you run ‘what-if’ scenarios can be helpful for your bottom line, and can therefore help improve your cash. For example, if I purchase an updated piece of equipment, what will the short and long term financial effects be? Using ‘what-if’ analysis can help keep your expenses in check, which can in turn improve your cash flow.
It probably goes without saying, but make sure you choose a business that you’re interested in. Look back over your history and remember what it is you were doing when you were happiest. Perhaps it was quiet research, or reading, or it could have been group gatherings of some sort. It makes no sense to start a catering business if your real love is baseball card collecting. Follow your interests and make a business out of them.
This isn’t just a pat yourself on the back exercise, although there’s certainly merit in acknowledging your achievements! Too often as I work with small business owners I find they are mentally beating themselves over the head for should-have’s. I have to figuratively wrestle the bat out of their hands to get their focus back on their roadmap to success.
These are the questions that will get to the heart of who you are, who you want to be, how you want to be recognized and found. If you have already built a messaging hierarchy, that will be an essential part of website optimization. If you’ve already invested in outstanding marketing materials, repurpose them (and their messages and images) to the website.
Tip No 6 – Give customers as many options for payment as possible and emphasise your preference for electronic payment such as direct debit which have less processing fees than credit cards and go straight into your account.
This is the list of strengths and weaknesses which you must seriously understand before you go forth in any business. It is your greatest asset to know what you strength is… BUT equally as important is knowing your weaknesses and making a vow to correct them.