In your startup companies one of the most critical elements you face is your ability to manage cash flow, especially cash flow shortages. Most businesses experience ash flow patterns that are positive and negative (i.e., peaks & valleys). You must plan for when actual cash flow results are lower than the expected results before it happens. You should not plan your cash flow forecast so tightly that a small variation in actual results can have a significant effect on your ability to keep your business going.

A. Explain, in detail, how you would effectively deal with and plan for the inevitable cash flow issues in your business. If there is a projected shortage, how will you cover it?

B. Are all cash shortages indications of impending disaster? Explain why or why not.