By: Ethan Rogers
Most businesses don’t fail because they don’t have customers. They often face difficulties because they run out of cash. Many entrepreneurs assume strong sales equal financial stability, but even profitable businesses may encounter challenges when money isn’t available at the right time.
Kelli Lewis is the founder of KelliWorks. As a small business expert, she has worked with business owners who were making money yet frequently felt overwhelmed about covering payroll and expenses. The problem wasn’t revenue; it was poor cash flow management. Understanding how money moves in and out of a business is essential for financial stability and long-term success. Kelli Lewis built her company on the idea that business owners shouldn’t have to struggle with financial management alone—that’s where KelliWorks can offer support.
Why Businesses Struggle with Cash Flow
One of the biggest mistakes entrepreneurs make is assuming that if they’re bringing in sales, their business is financially secure. But if payments from clients take months to arrive while bills are due weekly, financial stress builds fast.
For example, a marketing agency might sign high-value contracts but work on 90-day payment terms. Meanwhile, rent, payroll, and software subscriptions need to be paid monthly. If there’s no plan to bridge that gap, the business may rely on credit just to stay afloat, leading to unnecessary debt.
Unexpected expenses also contribute to cash flow problems. Equipment breaks, supplier costs rise, or sales slow down due to market changes. Without a financial cushion, businesses can find themselves scrambling, delaying payments, or taking on high-interest loans just to keep going.
Another common issue is limited financial visibility. Many business owners focus on revenue and profit but don’t track when cash is available. Without real-time tracking of income and expenses, financial problems might remain unnoticed until they become critical.
How to Take Control of Cash Flow
The first step in managing cash flow is forecasting. Instead of reacting to financial shortfalls, business owners benefit from anticipating them. By looking at upcoming income and expenses for the next three to six months, they can spot cash shortages early and adjust before they become a crisis.
Structuring payments wisely is another essential strategy. Many businesses struggle because they wait too long to collect payments. Instead of billing clients only after work is completed, they might consider deposits, milestone payments, and shorter payment terms. Automated invoicing and follow-ups help prevent delays and support a more consistent income.
Maintaining a cash reserve is also important. Setting aside three to six months’ worth of expenses provides a safety net, allowing businesses to cover unexpected costs without resorting to debt. Even setting aside a small amount each month can build a financial cushion over time.
Reducing unnecessary expenses can further improve cash flow. Many businesses pay for services they rarely use, have inefficient processes, or miss opportunities to negotiate better rates with suppliers. A regular review of expenses can help free up cash for more important needs.
Shifting the Cash Flow Mindset
Cash flow management isn’t just about numbers—it’s about changing how business owners think about money. Many focus on growing sales, assuming revenue alone will keep their business stable. But sustainable success often comes from managing cash wisely, not just increasing sales.
Before expanding, hiring more employees, or investing in new products, business owners should ensure they have the cash flow to support that growth. A business that isn’t financially stable at its current size may face even greater challenges when it scales. Entrepreneurs who take control of their cash flow early are better positioned for long-term success.
Conclusion
Cash flow is what keeps a business running. Without it, even profitable companies can struggle to survive. The difference between businesses that thrive and those that fail frequently lies in financial planning. By forecasting cash flow, structuring payments effectively, maintaining a cash reserve, and keeping expenses in check, business owners can reduce financial stress and focus on growth.
Kelli Lewis has helped numerous entrepreneurs improve their cash flow strategies, supporting their journey toward financial stability. Managing cash flow isn’t just smart—it’s a foundational skill. With the right approach, businesses have a stronger chance of moving from financial uncertainty to long-term stability and growth.
Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or professional advice. The insights shared by Kelli Lewis reflect her experience and expertise and may not apply to all business situations. Entrepreneurs are encouraged to consult a qualified financial advisor or accountant for guidance tailored to their specific needs.
Published by Drake M.
