Your success as a business owner comes down to whether or not you can pay your bills and still turn a profit. Seems obvious, right? But achieving a healthy balance between monetary intake and output is an art that confounds many entrepreneurs. I am not exaggerating when I say that your ability to manage cash flow will either make you or break you.

I have seen otherwise-successful business owners crumble under the stress of poorly managed cash flow. Likewise, I have watched colleagues flourish under a well-structured, well-maintained accounting system. Fortunately, it’s quite possible to stay on top of the money coming into and going out of your company. Read on for some insights that have led to my own businesses’ successful cash flow:

Assume that your estimates are wrong — and save for a rainy day.

No matter how carefully you plan for all potential cash-related scenarios, you will not be able to accurately predict the “weather” of your operating environment. At any moment, a storm front could appear out of the blue. Don’t get me wrong; it’s a good idea to make rough estimates for your cash flow. Just be sure to give yourself a healthy margin for error and expect the unexpected. Keep a nice cushion of “extra” money in your account for surprise bills. I know entrepreneurship is based on taking risks, but where cash flow is concerned, err on the side of conservatism. Remember that cash is king. No matter how much we dislike it, cash flow determines what we are able to do with our business.

Don’t underestimate the value of a good customer.

You have the choice to run your business as you see fit. But no matter how successful and powerful you become, remember that your customers are the reason you exist. So be good to them. Some of my oldest customers are still my best customers. One company can spend millions on your services over the years. If you’re a consumer company, even one person can be worth thousands of dollars over the span of your business relationship. For this reason, you must not let success change your mission to give every client and customer the royal treatment. They are, after all, responsible for the incoming cash you will use to pay rent, taxes and other fees.

Keep tabs on your expenses.

Don’t rely on your memory alone to know when to pay your bills, order new supplies or bill your clients. Even if you run a very small business, you will never be able to pay everything on time if you don’t have a system in place to help you keep track of it all. For this reason, it is imperative to appoint some method to help you keep your bills and their due dates separate. Your system can be as simple as keeping a notebook documenting when to write checks and when to deposit them. Or you can utilize a computerized system like QuickBooks to help you keep track of everything. Being well organized will ensure that your supplies are always in stock, your power never goes out and your employees get paid.

Be firm but kind with clients.

It is important to run your business in a manner that tolerates a certain amount of leniency with clients, but don’t let them walk all over you either! If you establish yourself as a complete pushover, even clients with the best intentions will take advantage of you. It is also important not to run your company with an iron fist. You want to find a happy medium that will keep you in business and keep your clients happy. That being said, don’t be afraid to politely call a customer who hasn’t paid a bill and remind him or her that it is overdue. They understand that you have provided a service and it requires a payment. You can preserve your client relationship and get your money by treating the client with integrity.

Break even.

You have to at least break even each month to survive. If you are facing hard times, your biggest goal will be to just break even — and then get back on track. For obvious reasons, you want your incoming cash to be significantly higher than your outgoing. So engrave your break-even number in your mind or sticky-note it to the front of your computer, and see that you surpass that number each month. Simple. Here’s a quick tip: If you are having problems breaking even one month, tell your vendors, don’t keep them in the dark. No one likes surprises, especially your bank.

Be honest with the man.

Do not, I repeat, do not try to cheat the government. Some very clever people have filtered out money from their business that they were able to keep out of the government’s grasp … for a while. You may get away with hiding money, under-reporting income, fudging your write-offs and other methods of cheating, but you probably will not. Uncle Sam has gone to great lengths to set up systems that keep this from happening easily.

Why taxes are good. (Really!)

Many businesses try to have a very small profit at the end of the year so they don’t have to pay huge amounts in taxes on it. This can negatively affect cash flow if you keep your business account so low that you don’t have enough of a pad to pay an unexpected bill. Rather than taking tax avoidance to extremes, get out there and try to make more money. If you think about taxes in the right way, you won’t view them as such a bad thing. You may as well assume paying more taxes means that you are doing very well.

Keep away from credit cards if possible.

Credit cards are necessary, but that doesn’t mean you should run up a mountain of debt. Businesses shut down because of factors like credit card debt, so swipe with caution if you have to swipe at all. Don’t max them out, by any means. If you find that you have to max out a credit card your business may already be in trouble and it is time to seek alternate funding.

A FINAL WORD

Don’t worry if managing your cash flow seems very difficult and even overwhelming at first. Cash flow is very complicated and can take some getting used to. After a few months, you will embrace your monthly monetary obligations and may even find a sense of comfort in the ebb and flow of money. Like the tides and the seasons, cash flow has a natural “rhythm” that keeps you grounded and helps you make sense of your place in the business world.

Before you know it, you will use cash flow as a gauge of your ability to take risks — and that knowledge will help you make the kinds of smart decisions that help your company grow and flourish. Remember, when your outgoing exceeds your incoming, your upkeep is your downfall.