Salary and Cashflow Problems

Over the next Several Weeks we will be posting a new and different one-minute video providing business tips and instructional commentary for small business owners.   These tips will range from key metrics to consider to the importance of Business and Cash Flow Forecasting.

Many companies develop cash flow problems one or two years after having a record breaking sales year. My name is Michael Barbarita from Next Step CFO providing outsourced CFO Services with your know your numbers minute. When the business owner has a record breaking year, they have a tendency to increase their salary permanently, thinking they will continue to increase sales records. This rarely happens. When the business comes off of those record breaking years, the business cannot afford the owners’ higher salary and cash flow problems ensue. The way to prevent this problem from happening is through the use of bonuses, and bonus yourself for a good year, but then, keep taking your normal salary the next year. And remember, the most successful business owners know their numbers!

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