If you look at major banking systems, one of the main focuses is the cash flow. Understanding cash flow is one of the first steps to becoming your own banker and utilizing it to drive your personal wealth.
The goal for any business is to have a positive cash flow. This means that you are bringing in more money than it takes to run the business. The simplest way to do this is by selling more products or services and finding ways to cut costs. Measuring the difference between how much cash you have at the beginning of a time period compared to the end is called the closing balance. If you have a higher closing balance, this means you brought in more money than what you started with at the beginning.
Cash Flow and Private Wealth Management
The true measure of your financial prosperity is your cash flow. When measuring opportunity costs, the results should yield the potential for a positive cash flow. Look at ways to increase the cash flow of any ventures you choose as well as any possible hindrances and solutions to these problems. Keeping focus on this vital aspect of wealth management can help you understand where your money and resources are going and how to best capitalize on them.
Even if you feel that you have a solid plan to create a positive cash flow, always look for other ways to increase incoming cash. If you only offer one service or spend all of your resources in one area and it fails, this can have devastating results.