Why do so many business owners have no cash flow plan (Even when the business owner has negative cash flow in at least one month of the business year)

If it is a simple business with a single distribution channel serving a homogeneous customer group, the owner most likely runs the business from a required monthly target of cash receipts and a cushion of cash or credit card or line of credit available borrowings.

The owner has usually been in the business a number of years, the revenues are stable and there is no perceived need to invest in growth.

What is wrong here?

Well, somewhere down the road this business will face competition of increasing intensity and probably enough to dislodge its footings. Such an event will deplete profit margins and cash reserves very quickly leaving no time and no money to weather the rebuilding period.

In some cases the business has already entered a competitive zone and still the business owner has no cash flow plan. For example, the owner fully realizes the return on the financial investment and hours worked in the business are not matching what was expected let alone what similar businesses are earning.

In summary, a cash flow plan forces an owner to confront the reality of competitive forces, to build a cash reserve and to survive rebuilding periods.