Successful business owners devote regular amounts of energy and time managing the day-to-day fluctuations of their cash. And they sleep better simply because they know. It's the not-knowing that drives most owners to getting less sleep--and therefore having less health.

Cash Flow Analysis sounds mysterious, and to some novice owners it sounds like something they might not have any skill to do so they avoid it. Whether or not you have the skill is not relevant, really. You own a business, therefore, continuing to learn about money matters is a must. If this sounds like you, find someone who can teach you how, set up your systems, and learn how to do it. Or, hire them to do it for you.

The simple daily, weekly, or monthly analysis is based on 4 basic elements: your bank balance, the bills you owe, the money owed to you, and the investments and loans in your system. 

The frequency of your analysis is up to the size of your balances and transactions. Small businesses can get away with a weekly or monthly check. Larger businesses are tied to a weekly or daily check. As your business grows, the analysis can get more complicated because there are predictions and budgets involved. 

1. Your Bank Balance: Reconciling your bank account every month is critical. Knowing where      you stand in your bank account gives you the foundation for understanding what the next week's cash needs are. Without it, your foundation is as good as sand.
2. Bills You Owe: Otherwise known as Accounts Payable. Bills you owe are the monies that are going out of your business, including payroll, vendors, regular expenses, loan payments, and the monies you owe Uncle Sam.
3. Money Owed to You: Known by Bean Counters as your Accounts Receivable. This is what your customers and anyone else owes you.
4. Funding from Owners, Investors or Lenders: Leverage your resources by using other people's money to expand your business' reach. Most business' keep their account balances in check by getting help from lenders or investors on a fairly regular basis.

If your cash picture is bleak, denying reality by not looking at it is not helping you. Take charge by building a system for each of the elements, do the calculations, and review it regularly. If you are having trouble with the system creation or making the time--hire it done!

If you build a system, stick with it, and review it, your bleak picture will transform into a fantastic picture. How? Because you will see the bottomline, you will start to make decisions that make cash flow sense. You will get better at collecting payments, cutting expenses, and bringing in revenue. It's just a natural evolution.

Before you know it, it will be a something you look forward to. And then you can take a nap.