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Cash flow has to do with how much money is coming in and going out of your business. It also involves your financial ability to make future investments. One of the worst things that can happen to a small business owner is not having enough cash on hand to cover normal operating expenses—things like replenishing inventory, meeting payroll, and keeping phone and electricity bills current. A cash flow shortage can also prevent businesses from expanding. If there aren’t enough funds available it can be difficult purchasing new equipment, tools, or software.
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