For the business gurus amongst us… I can see you rolling your eyes you know!
Of course you use a cashflow, I mean seriously who wouldn’t??
However, lots of people don’t, even those who know they should, don’t always get round to it…
I get that we are busy, at the moment everyone is all over the place (January 2021 in case you’ve found this on a deep search somewhere in 2030 – look up 2020 and 2021 hopefully it will make you gasp as things are SO different now, in a good way!).
These are the 3 reasons why you should take the time and wherever you are in your business cycle do a cashflow, project it forward and start monitoring against it.
Reason 1 – Planning
A cashflow tells you how much you need in your account each month to cover bills.
The good thing about projecting a cashflow 12 months in advance, is that you don’t get caught out by those pesky annual bills like insurance, you can see them coming and can ensure you have the cash ready.
You can also see very readily if you need to increase your sales (number sold), your profit margin (prices) or both!
Reason 2 – Budgeting
The process of looking at your expenses on a monthly basis and projecting those expenses forward 12 months is a form of budget.
This enables you to take a look at your business and decide how much you can allocate to spend on areas such as marketing, training etc.
It can also show you if your sales income can support that extra pair of hands you want to hire to help with next year’s Christmas rush!
When you have a projected cashflow it is important to assess each month to see how the actuals compared with the projections.
Initially it may be that you have forgotten a few expenses, that’s fine if they are needed, simply add them into the projection going forward so that it is accurately reflecting your costs.
Reason 3 – Plugging business leaks.
Reviewing your actual costs against your projected cashflow can also highlight where you are spending money that isn’t contributing to your business anymore.
For example, you may have a recurring subscription that you’re no longer using.
Looking at your actuals against your projections will help you see where your business is leaking cash enabling you to plug those leaks!
You can find a sample cashflow forecast to get you started in the Facebook Group – it is worth taking the time and getting started!
Do what you love and be kind to yourself.