15 Things Every Business Owner Should Know

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Always remember: Cash is king.

Cash crunches happen from time to time, but if they are chronic at your company, then you may have to re-think the way you do business. Though cash-flow squeezes often seem mystifying, there are only a few explanations: Your gross margins may be too low, caused by discounted prices or out-of-control direct costs. Your overhead, including rent and payroll, may be too high. Your payment terms may be too liberal or your billing procedures too slack. You may be tying too much money up in accounts receivable or you have too much debt from nonpaying customers. Finally, it is also possible that you are holding too much inventory. If you feel tight on cash, investigate each of these possibilities and figure out which one is causing the biggest drain on your bank account.