How do I deal with the inconsistencies of cash flow?

Rule number one: Don’t operate on the theory of hope.

To truly understand the intricacies of cash flow, you have to be brutally honest with what’s happening in your business. Start by setting up a forward-looking, 13-week cash flow projection tracking your business needs and wants, specifically highlighting your fixed and variable expenses. 

This means not just seeing your cash flow at a moment in time, but having visibility into where the dollars are coming from and where they are going. Consider this; if you’re a restauranteur specializing in Mexican cuisine, your fixed weekly expenses are things like rent and salaries. But, say there’s a price increase in limes next week– a large part  of your daily operations, do you have the flexibility in your cash flow to accommodate that variable cost? The 13-week projection will help you plan for this hurdle, how it will affect the weeks ahead, and properly pivot/make the best business decisions based on that breakdown.

Tip: Start by developing your 13-week cash flow model based on your profit and loss statement (P&L’s) first, and your balance sheet second. This is as simple as pulling your P&L’s out of Quickbooks, and using that information as a baseline to develop a model going forward. From there, really break out your fixed expenses (the “musts” for business operations) and variable expenses (the things you may have some leeway in pushing or changing if you need to try), then match those expenses with your revenue numbers.

Remember, keeping an accurate and detailed record of transactions will leave less room for cash flow mishaps. The stakeholders in your business (your clients, employees, partners, government/other agencies) play a role here. It’s all about having a sense of what’s around the corner.

Don't see your issue? Enter your email address below to talk through your specific situation with a Gerber team member.


Entrepreneurs who asked this question also wanted to learn about:

How do I pay for business growth?

At this point you should rely heavily on the stakeholders in your business. Your vendors, customers, employees, the bank, and even the government have pull here. Consider how you can leverage those relationships to aid your growth. From there, focus on monitoring and using your vendors and customers, and managing receivables and payables. Try providing incentives for your customers to pay their invoices sooner.

For example, offering a 10% discount if they pay in 30 days, rather than the typical 90 days. Providing incentives can get dollars in your pocket now. Additionally, right now you should also be thinking about labor costs and how those affect your cash flow, profits, and revenue. One of the biggest expenses for businesses is labor. But as an emerging business, you need to be strategic in your spending. In later stages of business, it’s almost always better to pay your people a high enough wage that they don’t consider going across the street for a few more dollars.

But at this point in business you likely cannot afford to do that. Instead, put incentive based compensation in place (for now) and tie those to metrics with intended consequences. Ex. every quarter pay a bonus to your employees tied to incentives that generate positive cash flow. This will make their annual wages competitive, but instead of giving those dollars outright, tie the bonus to a money making activity (growth, revenue, profit, cash flow) so those dollars aid your business growth. The key here is to find a way to pay your people enough, but not so much that your payroll puts you out of business. Don’t go at it alone. Enter your email address below to take a deeper dive into funding business growth with a Gerber team member. 

Find us on   

INTEGRATING LIFE, BUSINESS & WEALTH  614.431.4343 / 1.855.391.1761  121 E. Nationwide Blvd., Columbus, OH 43215
Gerber, LLC is an Independent Registered Investment Advisor. Securities offered through Raymond James Financial Services, Inc. Member FINRA / SIPC. Raymond James financial advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered. Therefore, a response to a request for information may be delayed. Please note that not all of the investments and services mentioned are available in every state. Investors outside of the United States are subject to securities and tax regulations within their applicable jurisdictions that are not addressed on this site. Contact your local Raymond James office for information and availability. RJ Privacy Policy. This content is being provided for informational purposes only. We do not guarantee that the foregoing material is accurate or complete. The opinions expressed are those of the team at Gerber, LLC and are not necessarily those of RJFS or Raymond James. Raymond James Financial Services, Inc. and its advisors do not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. Raymond James corporate Privacy Notice. 
Check the background of this firm on FINRA's BrokerCheck.


Gerber, LLC is not a registered broker/dealer, and is independent of Raymond James Financial Services. Securities are offered through Raymond James Financial Services, Inc. Member FINRA/SIPC.
Investment Advisory Services are offered through Gerber, LLC