Businesses and Sustainability - The First Leg is Financial

Whether we are talking about what keeps your doors open, or how to lower the environmental footprint of your business to make it more sustainable, you must be financially sound. Entrepreneurs are generally well-versed in the practice of frugality, but may forget some simple tactics for handling cash flow effectively, and giving attention to timely and accurate financials.

Why do I write this? How many of you have been working with businesses, or business units, that are constantly strapped for cash? Why is this? For mission-driven businesses some of this reason may lie in the fact that people are too focused on the mission and not on the margin. Remember this point “There is no mission without margin!”

Cash Flow
Cash flow is the only thing that matters! This may sound overly simplistic, but it’s true, without positive cash-flow, no business is sustainable in the long-term. It will forever be constrained from making the impact it wants to because of a lack of cash.

All business owners and managers understand a profit and loss statement, and nobody intentionally budgets for a loss in a year, unless there are extenuating circumstances. However, the most overlooked aspect of any business is often its cash-flow. This is THE most critical aspect of effective business management.

One important way to tackle this challenge is to know your burn rate. That is, how much cash does your
business need to cover its operating expenses each month, not including one-time charges.

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