I'm sure after reading this title, you've had a few answers pop into your head. I'll bet these were among the ideas that appeared.

• Sales
• Customer service
• Social media
• Site visitors
• Profit

Those are all very important things to consider when you are starting a new business, or trying to improve an old one. And, to be honest, all of those will be needed to better serve this main goal. So, what is this main goal?

Two words... Cash Flow

Now, I know what you're thinking. Of course the bookkeeper is going to list something boring like cash flow. That's all a bookkeeper thinks about is money. You may have a point, but that doesn't make this answer any less valid.

I've been working with businesses big and small for over 20 years now. Throughout my career, nothing has been more instrumental in shaping the success (or failure) of a business more than cash flow.

What do I mean by cash flow?

There's no need for a detailed and complicated explanation.

Cash flow is a very simple concept. It's just the flow of cash in and out of your business. Positive cash flow means that more money is coming in than going out.

On the surface, this may seem a bit too obvious. Of course having money is important to a business. However, the reason cash flow is a problem with many small businesses is that they are looking at the wrong numbers.

What cash flow is NOT:

• cash flow is not sales
• cash flow is not profit
• cash flow is not your salary
• cash flow is not your credit limit

So many entrepreneurs get caught up in those numbers, and then wonder why they keep getting calls from collection agents.

My sales doubled this year, but I still can't pay my phone bill.

Just because you sold 10,000 widgets (or 3,000 billable hours) last year, doesn't mean you have cash in the bank.

Why?

• your expenses increased
• you're not charging enough
• your customers haven't paid you yet
• you borrowed too much, and all your money is going to pay off the loans
• you're paying yourself too much

These and other factors will all hurt your cash flow. Don't forget; if you "sell" $50,000 in services, but don't collect the money, you could still be "profitable" on paper. Unfortunately, your bank doesn't let you pay your mortgage with that kind of profit.

How can I improve cash flow?

Here are a few simple steps to improving cash flow, especially in the beginning stages of business.

• don't give out terms to customers, or at least require a significant deposit before beginning work
• research others in your field, and see if you could increase your hourly rates
• find complimentary services that you charge a flat rate for, that bring up your realized hourly rates
• make due with older equipment, use the furniture you already have, and make use of as many free software/services as possible

Finally, why does this matter?

Positive cash flow can have many benefits; the main two being leverage and security.

Leverage: Having extra cash in the bank means you have more buying power. This means you can buy common items in bulk, pay for better equipment and better services, and save money on bank fees and interest when you avoid having to borrow money.

Security: There will be times when money is tight, especially in the beginning. Having cash in the bank to cover these lean times will save you from missed vendor payments and the big cost of having to resort to loans to keep you afloat.

There are many ways to strengthen your business. You should work hard to deliver a good service, to advertise effectively, and to give amazing customer support. All of these things will in turn help you generate positive cash flow, which is what will keep your virtual doors open for decades to come.