What killed them?  They didn't have enough cash when they needed it.

Here's our list of seventeen actions to improve your cash position.

Which actions can your wellness business take?

1. Reduce inventory. Over-ordering ties up cash.  This includes everything from office and janitorial supplies to printed materials to the trinkets you hand out at health fairs.  It also includes your inventory of products you resell to customers.

2. If you invoice customers, don't procrastinate!  And include a specific due date like "October 4, 2006" on the invoice - not just "net 10" or "upon receipt".  Consider prompt payment discounts.

3. Don't expand until your business is consistently cash-positive. If you can't figure out how to make your current business produce more cash than you spend, expansion is probably not the answer.  Fix your sales and marketing problems.  Make sure people actually want your services at the prices you're charging.  Tighten down your expenses.  Then you can think about expanding.

4. Set aside an emergency fund. If you choose to ignore this advice, pay close attention to #11 below.  Every business will eventually have a sudden and large need for cash.  Don't say we didn't warn you. (And now's a good time to look at your business insurance, as well.)

5. Manage your supplier payments.  You don't have to pay every invoice as soon as it arrives.  At a minimum, pay according to the terms you've agreed to - not sooner.  Ask for early payment discounts and extended terms.  Consider delaying payment if you're really feeling a cash crunch.  Some vendors are willing to wait for payment and won't balk if you consistently pay at 45 or 50 days past-due.

6. Raise your prices.  We've counseled numerous clients to raise their prices.  Most customers won't notice - or say "I wondered why you didn't charge more!"  On big projects for business clients, get part of your payment up front.

7. Comparison-shop and ask for price matches.  The Internet makes it easy to comparison-shop.  Find the best price and ask your preferred supplier to match it to keep the business.  When buying software, ask for a competitive upgrade if you're switching from one vendor to another.

8. Consider bartering.  For example, perhaps you can offer wellness coaching in exchange for graphic design or web development services.

9. Take credit cards.  Why wait for customer checks to clear the bank?  You'll get customer funds almost immediately.  The value of having the cash usually outweighs the couple of percentage points you'll pay in fees, not to mention the hassle of dealing with daily check deposits and bounced customer checks.

10. Move quickly to resolve customer payment problems.  Deal promptly with customer NSF checks and credit card disputes.  Some business owners avoid these discussions...but your bank balance suffers in the meantime.

11. Project your incoming and outgoing cash.  Predict the cash you expect to get from customers.  Predict your outgoing cash to pay employees and bills.  Compare it to your actuals. You should be within 5% every month.  Take seasonal differences into account.  If you work with large businesses, plan on longer invoice-approval cycles.  Stash cash away for the quiet months.

12. Develop an emergency plan now.  Almost every business eventually experiences a cash crunch.  Have a plan for what you'll do.  Examples include borrowing from your personal accounts or family or friends.  You may be able to use personal or business assets as collateral for  loans.  And you may consider delaying vendor payments or payroll.  Don't dip into withheld payroll taxes!  The consequences are severe, as your tax advisor will be happy to explain.

13. Keep your banker in the loop during good times.  Don't wait until a crisis is well underway.  Treat them like partners in your business.  They have resources you may not be aware of.  (If you missed our series "A Banker's Words Of Wisdom For Wellness Businesses", read Part 1 and Part 2 now).

14. Consider consolidating your debts.  Review rates and terms and talk to your banker to see if consolidating several debts into one might allow a longer payment schedule.

15. Get a line of credit set up.  Work with your bankers to get a line of credit established now, so that you'll have it available if and when you need it.

16. Recognize employees and customers with gifts, not meals.  Gifts up to $25 help you reduce your tax bill because they're fully tax-deductible. Meals are only 50% deductible.  Check with your tax advisor for details.

17. Pay for goods with a business credit card.  This gives you payment flexibility if you need it, and gets rid of many of the administrative hassles of paying off invoices.  Request the most cash-rich time of the month to be your due date.  As part of your emergency plan (#12) periodically ask for increased credit limits so that you'll have available credit in a pinch.