Guide: How to Calculate Net Cash Flow in 4 Easy Steps

Net cash flow is the amount of money received and used in a business. Before you get your small business on the road, you will need to know how to calculate net cash flow. The cash flows are divided into three categories, operational, financial, and investment.

Step 1- The Calculation Net Cash Flow of Operational Activities

Operational activities are the goods and services a business delivers. The cash flow will help get an estimate regarding the amount of money, which is used while the goods and services are being delivered. In order to calculate the operational activities cash flow, there are three points to keep in mind.

  • The cash inflow in this category includes cash received from the sale of goods, services, any form of cash received, receivables, cash dividends, and cash interest.
  • Cash outflow is the cash given to the employee, suppliers, petrol pump, taxes, fees, fines, interest etc.
  • If you decide to use the indirect method to calculate, the outcome will reflect the total net income, changes, or increase in your liabilities and assets, such as inventory, payables, and receivables.

Step 2- The Calculation Net Cash Flow for Financial Activities

Just like operational activities, financial actives are also recorded. The amount of cash generated are the financials, this amount is generated through sales, stocks, bonds, or other sources. There are two important points to remember,

  • Cash outflow in finance is the amount of cash paid towards debt, to reacquire equity, buy back stocks, or to divide the amount of cash within the number of shareholders equally.
  • Cash inflow is the cash generated from stocks, contributions, borrowing (loan), and investment income.

Step 3- The Calculation Net Cash Flow from Investing Activities

This is to determine the total amount made by investments. Keep in mind,

  • Cash inflows here will be the amount of money collected on principal note, sales of bonds, equity, property, sale of equipment etc.
  • Outflow will be the amount paid for purchases of assets, to acquire debt, purchase of property, equity interest, etc.

Step 4- The Final Calculation

After all three categories are totaled separately, combine the three totals in to one, that amount the ending balance is. This helps you generate an idea of the amount of money that is generated over a certain period. The following is an example:

Calculating Cash Flow for January 2015
Remember, you can use either the direct or indirect method to calculate net cash flow, both are considered accurate.

Bring Your Goals and Brand Together


In many cases, the goals of an entrepreneur and the way they portray their business align rather well – there is no dissonance between external branding and internal goals. But for some business owners, there is a lack of cohesiveness in what the business is trying to say. These are the businesses that throw lots of money into their marketing, sales, and branding efforts, but get little out of them. Internal organization is just as important as sending a powerful message, and the two must mesh together perfectly if your business is going to succeed.

Depending on how large your business is, your marketing, sales, and branding teams might be distinct entities, or three parts of a single team. Regardless of how they are organized, keeping them on the same page is crucial to keeping the business running smoothly. Internecine conflict and clashing visions will only harm your business in the long term, which is why it’s so important to keep these different parts of your business aligned with one another. Business leaders commonly fail to specify the exact way in which they are supposed to work together, because they lack a clear and defined vision. You don’t want to fall into that trap, because your business will never succeed on its own. Just as an army needs a strong general to lead it, a business needs a leader with a vision and a plan.

As far as your branding efforts are concerned, make sure you know which customers you are appealing to! You can’t expect to win over every single person that walks in your door, because there is simply too much variation in people’s likes and interests. Don’t try to appeal to everybody, because you won’t make anybody happy. Instead, focus your efforts on appealing to a certain demographic. When you know what your customers are going to look like, you can then refine your message and branding towards what they want and what they will likely respond positively to.

Once your branding is set, your marketing team can then begin to sell your business as the preferred choice for your chosen customers. An established branding guideline will enable your marketing team to create targeted advertisements that will appeal to the demographics your business aims to earn the business of. Continuous communication is necessary to ensure that your marketing efforts remain in sync with the branding of your business – you don’t want your marketing team to fall out of step with the changing wants and needs of your customers.

With a sense of identity in place, your sales team can begin to use the tools created by your branding and marketing teams to seal the deal. A sales team can employ persuasive, charismatic people, but without a strong marketing and branding strategy, they will not meet with much success in convincing people to buy from you. Continuous, dedicated research will ensure that your sales team will always remain completely up to date with the newest trends and developments in your industry.

These three parts of your business rely on each other to be effective. No one group is inherently more important than the other – without a sense of cohesion and teamwork, your business will fail from the inside. As the leader of your business, it is YOUR responsibility to provide a clear, defined vision for each of your teams. Once the pieces are in place, they will begin to mesh together like gears in a well-oiled machine. A team that works together always accomplishes more, and it starts with your marketing, branding, and sales.

How to Turn Angry Customers Into Happy Ones

Every business owner worth their salt knows the value of a happy customer. The saying “the customer is always right” is often misunderstood – it doesn’t mean that customers can get away with saying and doing anything. What it means is that if your customers tell you that you’re doing something wrong, you are doing something wrong. Their complaints aren’t made because they are bored – they see things that you are missing. Most business owners go out of their way to make customers as happy as possible, because happy customers are repeat customers.

But as every entrepreneur knows, even the best customer service can slip up at some point. Whether it’s your fault or not is irrelevant – the customer is angry at you, and you need to come up with a solution. How you handle these stumbles will frequently determine how well you perform in relation to your competitors. Some companies treat these customers as though they are a distraction – this is a sure-fire way to lose their business. Others apologize but don’t take any meaningful steps to make things right – this will result in customers feeling as though their concerns are not being taken seriously.

If you find yourself on the receiving end of poor customer reviews and sluggish business, it might be time to re-evaluate the way you treat your customers when they receive less-than-stellar service. The following tips are frequently employed by successful business owners who understand how to turn unpleasant moments into memorable ones for their customers.

1) Adapt to your customers

Every person reacts differently to an unexpected setback. Some customers get angry and demand immediate action, while others are more passive and don’t express their disapproval as vocally. Being able to read your customers’ body language is as important as listening to the verbiage they employ; a customer may tell you that everything is fine, when their tone of voice and facial expression conveys clear dissatisfaction. Other times, the customer just wants to be heard and validated. Listening to them talk without interjecting may prove to be cathartic, calming them down and putting them in a more rational state of mind.

Knowing how to read and respond to the different kinds of customers you have will go a long way towards finding what makes them happy.

2) Show empathy

We get it: having to listen to somebody complaint isn’t something you want to do. But for nearly all dissatisfied customers who complain, they want somebody who understands their perspective and cares about what they feel. Listen to them, and use phrases that reflect that you understand how they feel. A great way to do that is to relate to their grievance with the one you once experienced. Creating that human connection will prove to your customer that you see them as more than just an angry face. Those emotional connections will prove to be powerful an enduring, and it will go a very long ways towards securing them as repeat customers.

3) Accept responsibility and make things right

It’s not uncommon for business owners to try and justify why something went wrong – this is especially true if the error stems from something they did. If a customer doesn’t get what they ordered, don’t blame the employee who made it – apologize and accept responsibility. If a customer notes that they are overcharged for something, don’t blame the system or the person on the register- apologize and find a way to make things right. If your first instinct is to blame somebody else for what went wrong, that will leave a negative impression on you and your business as a whole.

The other part of this is that you need to find a way to make the customer happy. Whether you re-make their food item, give them a refund, offer them store credit, or even more, just remember that the cost of losing their business is likely going to be worse than the cost of making them happy. Don’t look at making things right as an expense – look at it as an investment. If you address their concerns in a way that makes them happy, you’ll recoup the cost again and again.

5 Networking Event Mistakes to Avoid

Most business professionals encounter networking events at some point in their career. Sometimes they run smoothly and other times they’re just plain awkward. Networking requires skill and is often time-consuming. Rather than giving up on it completely, though, our ActionCOACH team is here to help. Increase the value of these events and walk away with more contacts by avoiding these five networking event mistakes.

1. You don’t have a strategy

The opportunity is there, but are you leveraging it? It’s best to approach a networking event with a plan in mind. Mapping out your objective, you can then assess the actions that need to take place. Are you looking for business partners? What about possible leads? Once you identify what you’re after, you can begin connecting the dots as to the people you’re looking to meet.

Identify which organizations, activities, conferences, and events your target contacts participate in and prioritize those opportunities. Put yourself in the right place at the right time, and it’ll be easier to form the right connections.

2. You’re focused on selling

Let’s be truly honest for a moment. Do you enjoy someone sales pitching you when you’re trying to relax and socialize? Fellow professionals can easily spot an agenda during a networking event. Instead, focus on authenticity and personalize the conversation. Ask them about their industry and personal brand. Learning more about them rather than selling, allows you to win over their respect and trust.

3. You’re a chatterbox

A conversation is a two-way street. As much as you’ll want to share information about what you do. At a networking event, active listening is key. Take a moment to step back, allowing your potential contact to open up about themselves. This will give you the opportunity to gain valuable insights into their company. Ask them about the business challenges they face, but be sure not to prod too much. They’ll remember that going into the next networking event.

4. You’re not following up

Are you doing anything to follow up with potential contacts? If you’re not, you could be missing out. Brad Sugars and our team recommend that you request a LinkedIn connection as soon as possible. The secret to fostering a relationship is remaining fresh in their mind. Also, personalization is a game changer. They may receive quite a few requests so make yours stand out by including a short, memorable message in regards to the conversation you had.

5. You’re not providing them value

Networking is all about the give and take. Even if your contact isn’t quite the person you were looking for, keep them in your pocket. You never know when that connection could be valuable. Following through can transform a brief interaction into a long-lasting partnership. So if they’re not ready to work with you just yet, don’t lose hope. Instead, work on nurturing this new lead. If you discussed some of the challenges they face during the conversation you had, not only provide your contact but collaborate with them on finding a solution.

How to Hit the Target

Have you ever wondered what is the most important factor in effective marketing? Is it the dazzling new features that the product has? Is it the incredible offer? Is it how fancy or original your marketing material look?

The answer: NONE. The most important factor in effective marketing is targeting the audience you are aiming to reach. Whenever I say this, some people will react with “everybody can use my product”. Well, even if everybody can use your product, EACH one buys from you for a different reason, effective marketing is to message specific groups with specific messages that they care about, instead of a general message that slightly touches all groups.

Now the question becomes: “How do I drill down to the ideal target audience?”. If you review your current client base, you can categorize your clients in the following 4 categories:

Awesome – they spend more than average, are a pleasure to serve and never quibble about price
Basic – they are your solid clients who give you repeat businesses
Can’t deal with – they are the “squeaky wheel”, and constantly compare prices
Dead – they are the inactive customers

Which category of clients do you need for your business to grow in a healthy way? Awesome (A-grade) clients of course! Your job is to then identify some common characteristics of these A-grade clients. These can be factors such as demographics, location, what they buy or how much they spend etc. You can even be more thorough – carry out a client survey and actually ask them! You could also take the opportunity to find out what it is about you that they like, which will help you find your Unique Selling Proposition.

Once you know who your A-grade clients are, you can start to build your marketing campaign targeting those clients. There are many ways to do this but one of the simplest is the 5 ½ W’s approach.

Who do you want to target? – Be as specific as you can!

What do they want? – Which product are they interested in?

Where do you find them? – Is there a common place where most (or some) of your A-grade clients gather? Is there a magazine that most of your A-grade clients read?

When will they be looking? – Is there any time-dependent buying pattern?

Why should they take action? – What is that compelling offer that makes your clients take actions?

How are you going to communicate to them? – What medium will you choose – radio, social media, letter, telephone?

This way, you can target your future clients one by one with a clear and specific message that will make them react immediately. We call this the guerrilla marketing approach. For more about this topic, you can read “Guerrilla Marketing” by Jay Conrad-Levinson.