Are you leveraging your business metrics to make better management decisions for your business? According to a survey conducted by CPA2Biz you aren’t. CPA2Biz, the marketing and technology services subsidiary of the American Institute of CPAs, surveyed 500 small businesses with an average of less than 15 employees and $2 million in annual revenues.

“Clearly, based on the survey, these small business owners are not taking advantage of simple tools that would help them better manage their profitability and performance,” said Bill Reeb, CPA.

The number one issue facing small business is ensuring adequate cash flow from operations, according to 83% of survey respondents. That’s no real surprise. Most small business owners I’ve encountered say cash flow is the issue that keeps them awake at night.

Driving this issue is the fact that 51% of those surveyed say they don’t use a cash flow budget or forecasts to help manage their business and 32% say they don’t have specific metrics in place to monitor performance on a daily or weekly basis. And only 17% agreed that daily or weekly metrics are as important to them as their financial statements.

Plus another key survey finding indicated only 21% of participants measure their return on investment of advertising and promotional dollars; and only 11% stated that they regularly monitor non-financial indicators, like customer support calls and visits to the company Web site, to further evaluate business performance.

Surely you can do better. Take the time to determine key metrics for your business and make a pledge to keep on top of them next year. You’ll sleep better.

Are you already using metrics to manage your cash flow? Tell me about it.

More on this topic:

1. Pump Up Your Cash Flow By Getting Paid
2. A Cash Flow Budget Can Help You Control The Ebb And Flow
3. Timely Tips for Avoiding an IRS Audit from Tax Ninja
4. Think Sideways to Keep the Cash Flowing
5. Yes, Credit Is Still Available If Your Business Is In Good Shape

Smoothing out cash flow is a huge issue for most small businesses. And if your business is seasonal, that makes it even harder. The same holds true for many service oriented businesses. But no matter what type of business you run, you must take action to do what it takes to ensure you have enough cash on hand in your business to survive the lean times.

First and foremost, you must forecast and track your cash inflows and outflows. Knowing where you might fall short of cash helps you be proactive and address the issue before it becomes critical. The best way to do that is with a cash flow budget. Your best bet is to plan your budget on a twelve month basis so you have plenty of time to react and correct any shortfalls before they occur.

Once you’ve discovered where your shortfalls exist, brainstorm the actions needed to fix the situation. For a seasonal business, that might mean branching out into a related service that compliments your core services or placing your customers on a twelve month billing cycle to ensure you have cash every month. The worse thing you can do is know about the situation and never take any action.

So start today by sitting down and creating your cash flow budget so you have a clear picture of your business situation. You can pick up a copy of the free cash flow budget template here. Then brainstorm solutions and create an action plan to make them a reality for your business.

What do you think? How do you control the ebb and flow of cash in your business? Leave me a comment.

More on this topic:

1. Use Metrics To Manage Cash Flow
2. Adding Interest to Past Due Collections May Help Get Payment
3. Three More Things You Can Do Right Now To Pump Up Your Cash Flow
4. Is Cash Flow Improving for Small Business?
5. Think Sideways to Keep the Cash Flowing