Getting to grips with the figures in your business is essential. And this is true whether the economy is in boom time or gloom time.
If your eyes glaze over at the mention debtors and creditors. If you panic thinking about net profit or cash. Then it’s more important than ever to face up to the figures….
We often cringe watching Dragons Den when would-be entrepreneurs stumble and trip. So often they just don’t know the key numbers.
The cash flow of your business is its lifeblood. The cliché, “turnover is vanity, profit is sanity, and cash flow is reality” is completely and utterly true.
Six key questions to ask...
Having a good handle on what cash is coming in and going out is fundamental to the success of any business. Here are SIX questions to ask yourself:
- What’s your annual financial plan? Do you know the numbers?
- Is there a month-by-month cash flow forecast? Again, do you know the numbers?
- Do you regularly review it and amend it?
- Do you just try and increase your sales and assume or hope that this will be good for business?
Beware: increased sales are not the same as increased profits and DEFINITELY not the same as increased cash!
- Are you tight on your credit terms with your clients and suppliers? Keeping tabs on the amount owing to you reduces the amount of cash tied up in the business and reduces the risk of people not paying you at all.
- Do you take advantage of all free credit facilities available to you from your suppliers? If you have 30 days to pay, do not pay after seven.
You can use your cash flow forecast to model and anticipate potential changes in your businesses, such as a change in turnover, an increase or decrease in prices. Knowing these figures and playing around with them helps you get to grips with the money, feel more organised and confident.
Has this article got you thinking about your business and how you want to grab the reins and drive it forward. Lots of people in your position feel just the same but struggle to find the time or feel they lack the skills or knowledge to do so?
Since 2007, we’ve helped thousands of business owners who have faced this exact challenge (the reality is that we all feel like this at times during our business journey. We run regular free events and we’d love you to come along some time soon and join in.
Bookings are open now: https://good-2-great.co.uk/free-seminar/
OR – perhaps you’re still at the start of your business journey – Check out Start Up Support