It seems pretty clear that the worldwide economy is focused on slowing down.

Like always, small business is in the forefront. However, the biggest threats you face in your small business have little to do with the overall economy.

A basic and ongoing threat to your business lies in managing your money - cash flow and profit. Something like 70% of first year business failures are due to cash flow problems.

Understanding your money would seem to be a foundation element in a business. So what's missing?

Let me use an analogy to better illustrate this. You've possibly been motorcycling, biking or dancing in your life. Doing these activities is fun and relies on a specific skill that is invisible and hard to define in words.

This skill, more than anything else in these complex actions determines the grace and control that you experience. This skill is balance.

Balance allows you to ride a bike, or dance. Sure there are many other factors involved but without balance, you're not graceful, efficient or in control. Ultimately, you're not going anywhere.

Running your business is about much more than money, just like biking is about much more than balance. However, money relates to business like balance does to biking.

Without money – cash flow and profit – you are not efficient, in control or going anywhere. This is the threat: Without money – cash flow and profit – there is no business. It is as plain as that.

So what's the (often ignored) first step in taming this threat? Measurement.

Setting up appropriate measurements will allow you to manage and control your businesses money. What are the measurements? Income statement, balance sheet, and cash flow forecast. 

I know - Ugh. The story told about your business in these measurements is sweet though.

For example, cash flow is measured over a set amount of time. It tracks the cash being received and spent by a business - the money you get in for product and/or service sales and the money you pay out to suppliers. Measurement of cash flow is extremely important.

Negative cash flow puts your business at severe risk because you cannot pay your suppliers on time – and the spiral begins of bad credit terms and delayed delivery of materials.

When the element of credit enters in is where some businesses can trip. You might have to sell goods and services on credit and purchase materials from suppliers with credit. Tracking the credit timing becomes a crucial part of cash flow management.

There's a vast amount of information that your measurement systems can tell you about your business and money.

Get help! Get an accountant to help you set these up. Growing your business will depend on it.