Are you able to measure the effect on your cash flow if revenue decreases 10%-30% or more? Managing cash flow can be a challenge for many small businesses. In a cash flow statement, revenue is counted right away, even when it's not yet received from the customer. If your income decreases, there could be a delay in how it may affect your cash flow.

One question I pose to small business owners: "Do you have a six-month cash flow projection?" If not, you may have a difficult time determining how successful your business will be during this COVID-19 pandemic. A projection helps you maintain the relationships you have with loyal customers. It prevents the many problems resulting from a lack of cash.

I talk with small business owners who are struggling during this pandemic. One of the questions I ask is "Do you have enough in cash reserves to cover expenses for the next 30-90 days?" Why? These reserves are crucial to help you pay vendors and employees during a financial crisis. Here’s how to figure out how much cash reserves your business needs for the next three months.