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Cash Flow: The Life Blood of Small Business

Nice article in yesterdays Tulsa World talking about how important the cash flow statement is to bankers who are reviewing small business loan applicants and their business plans. When we are reviewing business plans and coaching a client who will be presenting their plan to a bank for consideration, we make sure the client understands their cash position and how it plays in to their future cash projections. The banker will be looking closely at your projected cash flow from the time the loan is received to ensure that there will be enough cash coming in to the business to:
  • Run the business properly
  • Pay salaries
  • Pay back the loan

So here are some things to keep in mind as you project cash flow:

Do the numbers make sense? What changes to the business make your numbers believeable?
Finally, keep the numbers conservative.
The Small Business Development Center at the University of North Florida has workshops that address this topic. SBDC Certified Business Analysts are available free of charge to review your plan and discuss your cash position and projections so that are a useful tool and a strong indicator of your capacity to pay back a bank loan.
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