I am (sort of) on sabbatical leave from my regular gig at Penn State. I am working half-time at the Small Business Development Center (SBDC) at Penn State. (So, I went all the way to the other side of campus.) My goal is to enhance my educational programs with the experience of working closely with entrepreneurs on a regular basis. I am keeping a journal of my activities/experiences many of which are simply empirical applications of what has been theory to this point. (That is, I have taught it but haven't experienced as much of it as I'd like.)
Yesterday, I met with a business owner who has a great product that could be widely adopted within a certain industry. (All details must be withheld to maintain confidentiality.) The business has received lots of funds from goverment and non-government agencies/organizations because the product has a strong probability of succeeding. Lenders have also supported the business because there is a good probability of a large payout in the not too distant future, but all of that might go unrealized if they can't cash flow the operation.
This particular business, like many others, operates on tight timelines with respect to managing cash flow. Expense payments are scheduled around expcted receipt of funds from invoices, operating loans, etc. If those funds come in late, then expenses (including payroll) might be late. While some employees might be willing to wait a day or two for a paycheck, they probably won't be happy about doing that on a regular basis. Suppliers might choose to reduce credit availability if there is a history of late payment. Overall, it's just bad for business to get out of whack on cash flow.
Entrepreneurs MUST plan and manage their cash flows closely. As the gas that keeps the engine running, you don't want to run out of cash before you reach that profitable destination.
