By Steve Seals
Business cash flow problems are one of the most common reasons small businesses run into trouble. In fact, a recent study found that 82% of small businesses fail due to poor cash flow management. This means that even if your business is profitable on paper, lacking sufficient cash on hand when needed can lead to stress, missed opportunities, or serious operational challenges.
As a small business owner, managing business cash flow is one of the most powerful ways to stay in control financially. With a few strategic habits, you can reduce uncertainty and make decisions with greater clarity and confidence. Let’s break down some essential tips to help you stay ahead.
Profit Isn’t the Same As Cash Flow
Many business owners focus on profit, but it’s cash flow and the actual movement of money that keeps your business running. You can be profitable and still come up short when bills are due, simply because of timing issues.
That’s why it’s important to go beyond the profit-and-loss statement and regularly check your business cash flow. Understanding how and when money flows in and out of your business helps you make smarter, more timely decisions.
Create a Rolling Business Cash Flow Forecast
One of the best tools for managing your cash flow is a forecast that looks 30, 60, or even 90 days ahead. A business cash flow forecast maps out your expected income and expenses, helping you spot shortfalls or tight months before they happen.
Even a simple spreadsheet can help. Project your known income, like payments from customers, and your anticipated expenses, such as payroll, rent, inventory, and utilities. Once you see the pattern, you can prepare accordingly rather than getting caught off guard.
Speed Up Income, Slow Down Expenses
In a cash crunch, timing matters. To improve your flow, try speeding up how quickly money comes in. Send invoices promptly, make payment terms clear, and follow up quickly on late payments. You might even consider offering a small discount for early payers if it helps your overall position.
On the flip side, see if you can negotiate longer payment terms with your vendors. Even an extra 15 days can create more room for your business to operate smoothly.
Build a Cash Reserve
Just like individuals need emergency funds, small businesses need a financial cushion too. Ideally, you want to set aside enough to cover at least one to three months of operating expenses (more if your industry is seasonal or unpredictable).
If that sounds overwhelming, don’t worry. You can build your reserve over time, starting with small, consistent contributions during profitable months. The goal is to give yourself more options and peace when business slows or surprises pop up.
Cut Hidden Drains on Cash Flow
Sometimes the problem isn’t a lack of income but the small leaks that go unnoticed. Subscriptions you no longer use, excess inventory that ties up cash, or inefficiencies in staffing can slowly erode your cash position.
Make a habit of reviewing your recurring expenses and operational costs. Ask yourself: Is this necessary? Is there a better way? Small adjustments can add up quickly.
Self-Funding vs. Financing: Know Your Comfort Zone
Some business owners prefer to self-fund their growth or manage shortfalls by liquidating investments or tapping into personal reserves. Others might rely on credit. If you’re considering a line of credit or a business loan, do so strategically and treat it as a safety net, not a long-term solution.
It’s important to weigh the potential return on investment when taking on debt. Borrowing to fund growth can make sense if the capital will generate more revenue than it costs in interest, but only if your cash flow can comfortably support repayment. A good financial advisor can help you evaluate the risk and decide if it aligns with your goals and financial health.
Master Business Cash Flow With Our Guidance
Managing cash flow can feel overwhelming, but you’re not expected to do it all yourself. At Seals Financial Planning & Investments, we’re here to help you make sense of the numbers, create systems that work, and identify strategies to keep your business stable and growing.
If you’d like to build a better business cash flow plan or get a clearer picture of your financial position, let’s talk. Together, we can turn uncertainty into strategy, and strategy into sustainable success. Give us a call at (859) 230-3476 if you would like to schedule a time to meet.
About Richard Stephen (Steve) Seals
Steve Seals is owner and independent Registered Investment Advisor Representative at Seals Financial Planning & Investments VI, LLC, a financial planning services firm based in Lexington, KY. As an independent Registered Investment Advisor Representative with about two decades of experience in the investment and insurance industries, Steve’s firm is founded on getting to know each client personally, allowing him to provide sound financial advice throughout their career and into retirement. With the mission of guiding clients on the path of success, Steve is fueled by his commitment to excellence and goes the extra mile to make sure clients are fully satisfied. He believes in maintaining a positive mindset, creating partnerships with a purpose, and always striving for significant outcomes.
Born in Jenkins, Kentucky, Steve grew up with a love for basketball and serving his community. After high school, he served nine years in the United States Marine Corps, then earned a bachelor’s degree in accounting. He was eventually able to put his degree and desire to help others to work as a fiduciary financial planner. Prior to founding his own firm in 2014, Steve learned from working with Edward Jones, US Bank, University of Kentucky Federal Credit Union, and CUSO Financial. He also received his Security Series 63 and 65/66 through Keystone Financial Group, LLC, and holds various life, health, and variable insurance licenses.
Steve and his wife, Angie, have three daughters (Lauren, Peyton, and Ashton) and two grandsons (Kenyon and Kai). Steve holds a private pilot’s license, and the family enjoys sports, spending time at the lake, and traveling. To learn more about Steve, connect with him on LinkedIn.
