“Cash is King.”

For small businesses, the ability to exploit emerging opportunities, respond to market pressues, and make strategic investments in the future all depend on access to cash. As a healthy heart is the result of eating right and working out, possessing a healthy cash flow is the result of consistent, effective investments in marketing.

Though startups are especially prone to wave-like fluctuations in cash flow, it is an issue every business must address. When the iron is hot and production people are stretched to meet demand, it is natural to pull back on marketing and lead generation. However, your current workload is due to the proposals and invoices you sent out in a previous cycle, and you will be bored and broke in the next cycle if you let off.

So how can you combat this?

• Cycle Length: figure out how long your cycle is, from the moment a lead comes in until a project is completed and paid for (service company) or product is sold (product company).
• Lead Value: Look at the last 6 to 12 months and add up all the leads you received. Calculate the final sales value of those leads (minus abandoned projects, discounts, and so forth). Divide the number of leads by the final sales value and you have a rough value for each lead. If you need to make $50k a month to stay afloat, and each lead is worth $500, you need to generate 100 leads a month!