If you’ve ever been tight on cash, you know it’s not a great feeling. Yet improving cash flow and increasing the amount of cash in the bank is a goal of almost all new clients that come to our firm. 

Many business owners are stuck in the cycle of just making it by every month with very little runway to help cover the slow months that typically come seasonally with wellness businesses. Even wellness business owners who are doing very well often don’t realize how much cash they should be maintaining in the business to continue to grow and scale.

If you’re not sold on improving your cash flow already, here are four reasons why it should be a priority for your business:

1. Your stress levels and sanity. 

First and foremost, you don’t need the extra stress from cash flow problems. Especially if you’re a wellness business owner, you know the toll that stress can take on your body. And if you’re not at your best, your business isn’t going to be at its best either. Having plenty of cash will provide you with peace of mind, allowing you to focus on what really matters - leading your team and providing amazing care to your clients.

2. You need an emergency fund for your business.

Stuff inevitably happens and you need to be prepared for when it does. I had a client whose laser went down and was out of service for a week. Not only did it cost her over $4,000 for the repair, but it also cost her thousands of dollars in lost revenues that week. She did recoup some of that through business disruption insurance, but she had to front all of it. Had she not had enough cash in her bank account, she would’ve been in a bind. Having extra cash set aside provides stability and a safety net for unexpected expenses, as well as slow revenue months. Wellness businesses can be seasonal and you need to be able to make it through those slower months as well.

3. Minimize debt and interest expenses.

Not having enough cash on hand will lead to increased debt. Relying on loans and lines of credit for cash flow gaps will eat away at your profits over time. I’m not saying that debt or lines of credit don’t have a place, but you want to make sure that you’re getting a return on investment for anything you use them for. Continually using them to cover normal operations is only going to eat away at your future profits and cash flow. That will lead to other issues like not having enough cash for growth or being able to pay yourself distributions.

4. Growth and the ability to scale.

Think of cash like the basic building blocks of nutrition. Your business needs cash to grow. You need to have the flexibility to invest in things like staff development and marketing in order to continue to grow your client base and scale. Further, if you are planning to finance something like a new location, for example, banks are going to be looking at the stability of your current financial situation. With stable cash flow, you’ll be able to invest in new opportunities and take your business to the next level.

To wrap it up, cash is the cornerstone of a successful business. It creates stability, flexibility, and peace of mind.

If cash flow has been an issue for you or you just want to make sure you’re managing it well, we’re here to help. More than likely you didn’t learn cash flow management in school, but we’ve got you covered. This is the first in a series of blogs on how to manage cash flow. Subscribe to our YouTube channel, so that you don’t miss out.

If you’d like more personalized help managing your cash flow, book a discovery call.

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