Act 164

Deposits, minimums and billing – a small business owner’s BFFs

You know how in real estate the saying is location, location, location? Well in small business, it’s all about cash flow, cash flow and cash flow.

In the past year, I’ve had to rethink alot of things about my business. The friends I’ve met along the way are deposits from new clients for new projects, minimum hours for new projects and weekly or bi-weekly regular billings.

I used to bill monthly, never asked for deposits and worked whatever hours I was offered. But it’s killer for cash flow. And bad cash flow kills – or threatens to. Small businesses (under $1,000,000 in revenue and 5 or fewer employees) usually self finance through personal credit as banks and credit unions are unlikely to lend – especially the elusive operating lines of credit – which are indispensable to big business. Has this inflated the personal debt numbers? Given the number of small businesses (over a million of us in BC, apparently), I’d venture to say yes.

Anyway, it’s a matter of discipline – and it’s not always that fun to have to do or that easy to get. But such is life in small business. So if you deal with one of us, and we ask for some money upfront, you’ll know why. When we’re bigger, we’ll be easier on you. You have my word.

Act 58

Get to know your cash flow

Your budget is the foundation of your financial plan. BUt your cash flow is how the money moves in and out from week to week and month to month. I started using a handy little spread sheet that helps me optimize my cash flow. It’s not something you can check once a year or once a month. You really need to watch it at least once a week – and plan ahead – it’ll take the stress out of knowing wether or not you can make your payments and meet your obligations.

This is my excel sample. By no means is it scientific or accurate. It’s just an example of a basic cash flow sheet for a family with one paycheque, some debt, some insurance, some groceries, some fuel, a car payment – no frills. By carrying over your opening balance every week – adding in your revenue and substracting your expenses you can know ahead of time what you’ll need all month long and when and how much you’ll have to carry forward to next month.


I find it helps. Feel free to customize your own. Excel is a wonderful tool for tracking and projecting.