One of the leading causes of business failure, particularly among small businesses, is poor cash flow planning. It is imperative that a business have sufficient cash on hand to pay bills, meet emergencies and to invest back into the business to ensure growth. Knowing that you will have lean months when sales are slow is an important aspect of planning in terms of putting money aside, but it isn’t the only thing you can do. You can also:

1. Aggressively collect accounts receivable.

If you have a customer who has not paid on time, you need to follow up and secure payment. The longer you wait, the more difficult it will be to collect. In fact, studies have shown that after 90 days, the chances of collecting an account drops to 72%, down from 94% after 30 days.

2. Periodically review your pricing.

Ask yourself if you are charging too little or too much. Research your competitors. Do you offer more value? A customer will pay any price for a product/service as long as they are convinced that they are receiving value.
3. Establish a line of credit.

Approach your bank and see if you can establish a line of credit to be used during times of emergency. In the long run, a line of credit with a bank is a lot cheaper than credit cards should you find yourself in a cash crunch.

4. Increase sales.

Sure, it’s always easier said than done, but it can be done.

5. Open an interest bearing account and deposit daily.

Sweep accounts and interest bearing checking accounts may not produce a high yield, but 2 or 3 percent interest is better than nothing.

6. Renegotiate your lease.
Most leases come up for renewal on an annual basis. Approach your landlord with the idea of temporarily lowering rent payments during months when business is slow. If vacancies are high in your area, your landlord may prefer a reduced rent payment to no rent payment.

7. Hire more part-timers.

If you need support staff, consider hiring part-timers. Unlike full-timers, you are not required to pay benefits, and they are generally more flexible in their work schedule hours. Additionally, if you need to lay off staff in slow months, it is a lot easier to lay off a part-timer in comparison to a full-timer with benefits.

8. Don’t overpay on quarterly taxes.

If you think your income will drop this year, do not pay taxes based on last year’s numbers. Work with your accountant to ensure you have an accurate estimate. If you’ve already overpaid on your quarterlies, ask for a quick refund (IRS Forms 4466 and 1138).

9. Read the fine print in your equipment leasing contracts.

Get an option to cancel written into your equipment leases that allow for cancellation due to closure. Don’t get suckered into contracts with an evergreen clause. These are clauses that allow a contract to continue unless you give 30 day notice. These are difficult to cancel and the expiration date is hard to track.

10. Brainstorm with staff. Your staff may have great suggestions for cutting additional expenses. At your next staff meeting, ask for their input and ideas.

Author's Bio: 

Darrell Morris is the V.P. of Business Coaching for the Achieve Fitness USA Licensing Program. He is a dedicated toward helping fitness professionals achieve there goals of running a successful fitness business. For more information contact him at or visit and