Adequate Cash Flow Is the Life Blood of Your Business

Cash flow is one of the biggest challenges to a new business. Do cost estimates. Crunch the numbers before you jump. It can be especially dangerous if you underestimate your business costs.

by Martin M. Shenkman, CPA, MBA, JD

If you've worked for an employer, some significant costs of running a similar business may not be obvious. After you've done whatever research you can and put together projections, hire a CPA to review the numbers and discuss them with you.

Even if you want to keep costs to the bone and will use QuickBooks or a similar program to handle your own accounting, investing in a consultation with a CPA that knows your type of business may be wise.

Many of the costs of running a business on your own will differ from the costs a larger employer faces. Costs of running your business out of an RV may differ even more, some much less, others more.

Arrange for lines of credit and other financing before leaving your current employer. Even if your projections show that you should have very little risk of not having the cash flow to fund your business, a few unanticipated bumps in the road could destroy your plans.

Having an available business lines of credit, even family members committed to making a loan, can prove to be lifesavers. Arrange them in advance. Nothing can be a bigger scare to a potential lender than the fate of your business depending on it making a loan. Getting credit lined up based on reasonable projections, especially if reviewed by a CPA, is much safer.

It may be easier to arrange financing for your RV then to borrow money to buy inventory or set up a website. Use whatever works, but be conscious of the interest charges and other fees, and what liens the lender might insist on filing.


Martin M. Shenkman, CPA, Esq. sponsors a free legal website

Martin is an RVer with a special cause. He is an avid fundraiser for the National Multiple Sclerosis Society and The Michael J. Fox Foundation For Parkinson's Research. See his website for how you can help him fight MS. Besides RV business tax and legal information, he will share some of his RVing and fundraising experiences with us.

Caution: This article and other columns can never substitute for professional legal, tax, and accounting guidance. These columns can provide only broad general advice, which may not apply to your situation. The rules differ substantially from state to state. Tax, business, and other laws change rapidly over time so there can be no assurance that the information in this column is current. The best approach is to review the ideas in this article with your own CPA and attorney. The application of general tax and legal principles to some of the unique facts presented by RV working is particularly complex and there is little specific law providing guidance to rely upon.

Go to the next section of the Plotting the Great Escape: Leaving Your Job for Self-Employment article, which is on business insurance.

Go from this article on cash flow to the previous part of this article, which is about the employment agreement.

Go to the page listing all articles by Martin M. Shenkman, CPA,MBA, JD.

Go from this article on Cash Flow to the Work For RVers And Campers blog.

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