How does a Cash Flow budget help my Small Business start up?

Last week I talked about “Cash Flow - why do I need a budget?”  If you missed that post, you can review it HERE.  This week’s post is “How does a Cash Flow budget help my Small Business start up?”  You have a great idea for a new business.  But you can’t just dive into the business without a plan.  Part of that plan is doing a cash flow budget.   Learn more in this week’s blog.

You are finally ready to jump out on your own and start your own small business.  You have a great idea that you have tested and it is ready to go.  So now you just need to dive in and get to work, right?  If you want your business to succeed, you better have a plan for your cash flow.

One of the strengths that many small business owners possess is the ability to run with an idea and get it implemented.  You have a bias for action that keeps you moving and helps you accomplish things that people with ideas but no follow through cannot achieve.  But one of the reasons that so many small businesses fail is that they don’t properly anticipate their cash needs when they are in the start up phase.

There can be many factors that can slow down the growth of a small business.  Sometimes the natural optimism of an entrepreneur will make them think that the business will build more quickly than it actually can.  Sometimes there are factors in the market that turn just as you are getting your business going.  People stop spending money and your business suffers, even though you are doing everything “right”.  Sometimes you underestimate how much time and energy it will take you to get your business going and you just can’t get everything done as quickly as you thought.

No matter what the reason is, preparing a conservative start up budget can help you prepare for a slower start than you would like. 

Often we make jokes about how our accountant is always looking at things too small and too slow.  But remember they are helping you with your money.  The better they do their job of slowing you down and making you think through everything, the better off you will be.

You accountant would like nothing better than for you not to need any extra time or money to get your business going.  They want you to succeed.  But from your standpoint, you will be very appreciative of the conservative budget that you prepared either way.  If you succeed more quickly than the budget projected for you, you win in two ways.  Your business takes off and starts paying you for your idea and hard work.  As a bonus you have extra funds available that you didn’t have to use to get your business going.  You can use that money for something else!

If the more conservative budget was necessary you will also be glad.  No matter the reason, the time you took to prepare that budget and properly fund your start up will have been well spent.  It will help you cover the gap between what you wanted the business to do and what it actually took to get it going.  You won’t have that extra cash, but you will still be in business because you had enough money to get yourself through.

By preparing and funding a great start up budget you will be ready either way.  But remember that just because you have a budget that is conservative doesn’t mean that you can’t aggressively get your business going.  You can challenge yourself to beat the budget while still being prepared if something happens to slow you down.

So listen to your accountant and do the work to prepare a great start up budget.  Then go out and blow it out of the water!

If you know someone this post will help, please share it with them!  Then scroll down to the comments section and leave me a comment on this post.  If you aren’t already a subscriber, sign up to receive notification emails and information on other promotions!  I will be teaching my Cash Flow Workshop soon, sign up so you don’t miss it!

God Bless your week!