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A company's cash flow can be more important than the profits or losses that are
reported in its financial statements.

It is not unusual that a business fails even though it experiences great demand for its products or
services, is profitable, and has a promising future. Sometimes the failure results from a cash-flow
crisis.

A cash flow crisis occurs when:

1. Rapid growth ties up cash to finance accounts receivable or inventory.
2. Accounts receivable or inventory are not managed properly.
3. A company is not focused on or managing its cash flow.
4. There's a significant decline in business.

A successful company needs sufficient cash for a number of reasons; To meet its capital equipment
needs, toprovide adequate working capital for receivables and inventory, to provide for company
expansion and development, and to withstand downturns in its business. The assumption that most
people have when entering the health club industry is that you will sell the same number of
memberships three years from now as you are in the first year. It doesn't happen and most are not
prepared for it.

There are some things that a potential owner must explore when determining what direction to go
with financing the new business:

1. Discuss with the advantages and disadvantages of equity versus debt financing.
2. Determine the likelihood of succeeding in attracting types of financing.
3. Review with Business Loan Guidelines that a lender or investor considers when making a
financing decision.

Before approaching banks for financing one must:

1. Identify lenders who are most likely to accommodate your business's stage of development and
specific situation.
2. Define your actual need for financing.
3. Assess your ability to repay a loan.
4. Make a loan application, including guidance in preparing your business plan and presenting your
case to the bank or lender.
5. Insure that you have adequate control over your expenses and cash flow so that the lender has
maximum assurance of getting repaid.

Before approaching private investors, one must:

1. Identify sources of investment.
2. Understand the features, advantages and disadvantages of each.
3. Prepare financial plans and forecasts.
4. Define an "Investor Proposal" that outlines your needs.
5. Create a written business plan that clearly explains your business opportunity.
6. Prepare your presentation to potential investors.

A cash flow forecast that identifies potential shortfalls and surpluses must be prepared so that the
club can plan and react in a timely way.

Accounting and Reporting
Because a club must keep accurate records to provide key financial statements to government
agencies, there are some decisions and key actions to take:

1. The business must decide which is better: keeping records in-house or hiring an outside
bookkeeper or accountant to publish financial statements and prepare tax returns.
2. Get training in accounting and accounting systems if you wish to do the task internally.
3. Be able to set goals and strategize on motivating staff to hit those goals.
4. Develop a formal sales system.
5. Develop a 12-month marketing plan.
Our financial planning templates help you design and create a short-term (12 months) or long-term
(three to five years) plan to

You also msut set up a process for developing and reviewing the forecasted budget that:

1. Contains planned or expected revenue, cost and expense data detailed for each department and
month.
2. Provides a control tool to monitor results and take corrective action to keep the company on track.
3. Creates accountability on every level of the organization as department managers create their
portions of the budget.