Analyzing Cash Flow Is a Must for Your Jersey Shore Small Business

During your latest grocery shopping trip, were you standing bug-eyed in the dairy section, gawking at the price of eggs? In the latest egg news, the U.S. is now looking to Turkey (how’s that for irony?) for help importing record-breaking amounts of eggs.

That’s a major pivot in the global supply chain. And, it’s a reflection of a greater principle of business (that you’re likely familiar with): When unexpected challenges arise, you have to get creative.

But before I dive too deep into the current economic landscape, a quick reminder: The March 17th deadline for S corporation and partnership tax returns for calendar-year businesses is approaching FAST. If you’re scrambling right now to get things in order, let’s talk.

Now, back to business challenges: Expensive eggs are pretty miniscule compared to the economic giants your business is facing right now (unless you own a breakfast joint). Looming tariff hikes on imported goods and raw materials and other economic factors out of your control could easily put your business on the rails… but they don’t have to.

It’s up to YOU to get creative finding ways to absorb the consequential costs – whether that’s by finding new suppliers, adjusting your pricing, or cutting your expenses. And if you’re currently facing a creative block, let’s talk. I’m here to help you brainstorm the best solution for your Jersey Shore business:

calendly.com/shorefinancialplanning/the-first-step

All that to say, managing your cash flow is crucial to keeping your Monmouth Beach business afloat in the economic misfortune you and I are currently experiencing.

Because strong cash flow management isn’t just about covering payroll and bills, it’s about weathering challenges. And then, when the storm has passed, having the financial insight to move your business forward.

Analyzing Cash Flow Is a Must for Your ~ Profile.MarketArea~ Small Business

“We are surrounded by data, but starved for insights.” – Jay Baer

Running out of cash unexpectedly. Floundering financially every time an unexpected emergency comes up. Feeling stuck because you don’t have extra cash free for expanding your business.

Are these familiar scenarios for you?

It’s an exhausting (and not very profitable) way to run a business. But it’s how a lot of business owners operate. Because what they don’t understand is, these scenarios are outward symptoms of a greater problem: failure to analyze cash flow.

Good cash flow management is more than just making sure you’ve got more cash coming in than going out, though that’s the baseline. It’s also looking at where that cash is coming from, where it’s going in your business, and how you can better allocate it to achieve growth (not just maintain the status quo).

Why analyzing cash flow matters

To put it simply, you need to analyze your cash flow so you can have a clear picture of how money is moving in and out of your business. Without that, you can’t make truly informed decisions that will move you toward your financial goals.

And if you’re struggling financially, analyzing your cash flow gives you the WHY. Once you have that, you can strategize to fix the issues and optimize your spending.

Analyzing cash flow also helps your business in the long term. Financial crises like equipment breakdowns, seasonal fluctuations, or economic downturns won’t take your business down – because you’ve the extra funds on hand to help you handle surprises.

What to look for

You need to pull out your cash flow statement (and your detective’s hat). And if you don’t have one for your business, it’s time to make one. It’s a necessary tool for understanding what’s available to you. (If you’re unsure how to make one, I can help you get started.)

If your cash flow statement indicates a negative net cash flow, you’re sleuthing out the reason why. And if it’s positive, don’t put your feet up – you need to look to make sure your financial habits are fully aligned with your business goals. There are always more ways to optimize.

Either way, look over each category of your cash flow statement and ask yourself (and possibly your team) some questions…

Operating activities

• Are there any large, past-due accounts posing a risk to our cash flow?
• Are we effectively controlling our fixed operating expenses?
• How are our variable expenses changing in relation to sales volume?

Investing activities

• What is our inventory turnover ratio, and how does it compare to industry benchmarks?
• How are new opportunities affecting accounts receivable, accounts payable, and inventory?
• Is increased inventory from purchasing new equipment too expensive?
• Did new equipment actually cost what we initially projected, or are unexpected expenses setting us back?

Financing activities

• Do we have any variable interest rate loans? If so, what is the impact of potential interest rate fluctuations on our cash outflows?
• Are we taking advantage of opportunities to refinance debt at lower interest rates or more favorable terms?
• Are we using short term debt to fund long term assets?

Just analyzing your cash flow statement won’t fix your problems or move you toward your business goals. But it will help you pinpoint exactly WHAT your next step needs to be, saving you from guesswork and troubleshooting.

My team and I are here as a support system for you, no matter where you’re at with analyzing your cash flow statements. Whether you can’t seem to figure out how to turn your negative cash flow into a positive, or you’re unsure what to do with your surplus, let’s talk:

calendly.com/shorefinancialplanning/the-first-step

Happy analyzing,

Joseph Vecchio

‍