4 Metrics to Help Improve Your Small Business Cash Flow

In a recent study by TD Bank Financial Group it was determined that one of the primary challenges facing small business was cash flow (The other two were managing clients and government red tape).  This probably comes as no surprise to most small business owners, especially in the early stages.  Of course, the simple answer to this problem would be a limitless source of cash.  (Of course if we had unlimited funds, we may not find it necessary to endure the trial and tribulations of business ownership).  Since this is usually not possible, we need to do the next best thing: analyze our cash flow requirements and find the most cost effective and easily available solution for any shortfalls.  Even the most successful business can find itself shutting its doors if it is not able to manage it's cash flow needs. 

Below are 4 financial metrics, which if monitored regularly, can actually help improve your business' cash flow:

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Breakeven Analysis for Small Business

When planning to start a new business, one of the first questions you ask yourself (and hopefully your accountant) is at what point are you going to start making money.  One  simple way to determine this is to calculate the breakeven point, which is the point at which your sales (revenues) equal your expenses.

How is it calculated?

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