Poor Stock Control
Holding Excessive Stock
Buying in bulk can seem beneficial at the time, but holding excessive amounts of stock ties up money in unproductive assets, particularly if the stock is not sold on quickly. If you stock raw materials and/or finished products, effective stock control is the key. The costs of storage can also add up and so such costs should be considered when buying in bulk.
Sudden Change in Demand
It has happened – and businesses have paid the price although many of these are no longer around to tell the story because of it. It may be that demand for your service or product doesn’t vary significantly enough to dent your cash flow, but the possibility should never be over looked.
Although this issue can often be unforeseeable, it can be accounted for with appropriate What is Market Research? and effective Marketing a Small Business to maintain a steady demand to keep your business successful.
Summary
Cash flow problems are the main cause of business failure to date. This f act is likely to stick as people still fail to adopt good cash flow management, but you can prevent being a statistic by understanding how poor cash flow can be avoided.
Management is the key and depending on what type of business you are in, different strategies and actions need to be taken to ensure your continued success. An effective credit policy and control are always at the forefront of maintaining a healthy cash flow but at the same time, you need to be aware of the hidden dangers of excessive borrowing and investments (for example).
Forecasting and budgeting can be helpful to most small business managers where finances require tighter control and planning for future operations.
Article Index
- Avoiding Cash Flow Problems
- Too Many Debtors and Creditors
- Over-Financing, Overtrading and Over Investment
- Poor Stock Control
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