What You Can Do to Make it Better
When you’re a business owner, cash flow isn’t just a financial term—it’s the lifeblood of your enterprise. It’s the pulse that keeps your business alive and thriving. Without it your business will die, this is why so many business owners worry about cash flow, because instinctively you know it’s the difference between paying the wages and shutting the doors for good. Between the life you deserve and crippling debt.
In short without a good flow of cash through your business life will be hard, uncertain and full of stress.
That explains why you worry about it so let me ask you, what are you doing to solve that problem? Because I can promise you it is not just a part of being in business, it won’t solve itself and there are things you can do to stop the worry.
Let’s talk about getting a little clarity shall we
Imagine you’re driving a car. The fuel gauge is your cash flow. It tells you how far you can go, how fast you can accelerate, and when it’s time to refuel. Without a clear view of your cash flow, you’re driving blind. And that, my friends, can be a daunting experience.
One of the primary reasons you worry about cash flow is the fear of the unknown. Cash flow is unpredictable. It can fluctuate due to market conditions, changes in consumer behaviour, or unexpected expenses. This unpredictability creates anxiety and stress and that is the first thing you can do about it.
Create a Cash Flow Forecast
Not a profit and loss statement form last year or last month, not a review of your bank statement or a reconciliation review, a proper cash flow forecast showing what is expected to come into and out of your business ideally over the next 12 months, and as a minimum over the next 3 months.
Manage your Money
Have an operating account, a VAT account, a Corporation Tax account, a profit account and an investment account as a minimum, the Vat and Corporation tax are a legal liability for you and its no good getting to the end of the quarter or year and telling HMRC you don’t have it, because they don’t care, you should have it because you should have managed your money properly, not only do you need these accounts you need to understand how to manage each effectively and how to set threshold limits, this is not accounting its managing your business finances. Have a cashflow forecast and learning how to manage your money will allow you to build a reserve.
Build a Cash Reserve
This is the answer to how to stop the worry, think of a cash reserve as your business’s safety net. Set aside a portion of your profits after tax each month to build this reserve. This should be a minimum of 3 months and ideally 6 -9 months in a small business, if all your operating costs were covered for the next 6 months why would you need to worry about your cash flow. A reserve provides you with a buffer during lean times, allowing you to cover expenses without stress. This proactive step is crucial for maintaining peace of mind and ensuring your business’s resilience.
Easier said than done right?
Of course it is, but it is a simple proven method of managing your business finances if you just learn how to implement it.
If you want to find out how I can help you do that get in touch.
By Andy Walter
Follow me on LinkedIn, Facebook, Twitter or YouTube
or Get in touch.
Get A FREE copy of Get it Done
#Thinkdifferently #Growth #Awareness #Connection #Purpose #Meaning #Selflessness #Development #Mindset #Passion #Improvement #Action #Success #Coaching
0 Comments