Your entrepreneurial business depends upon the cash it generates. But what can you do to keep cash flowing in your business? Learn more in this week’s blog.
What you do today will affect your cash flow for better or worse. Here are 5 things that you can start today that will help get your cash unclogged in the New Year.
1. Use a Budget
It is critical that you have a well prepared budget to help you run your business. The budget preparation process will help you see areas where you can improve your operations, which will save you money. Comparing your actual results to your budget helps you see areas that need improvement. Use your budget as a roadmap to keep you on the path to profits.
2. Learn how to read your Financial Statements
A financial statement is not something to be afraid of. It is a snapshot in time of the finances of your business. The format may vary depending upon who prepared it, but the information contained in your financial statement should not vary.
An income statement lists your income and expenses and shows you if you are making money or losing money. This is the most important financial statement to get familiar with. You need an income statement to do your budget to actual comparison. This comparison shows you areas where your actual spending is out of sync with your budget, giving you an opportunity to make adjustments when necessary.
3. Assess your Accounting Methods and Software
You need to have a good system in place for keeping track of your finances. A shoe box that you throw everything into until the end of the year won’t cut it. And just because you have money in your checkbook doesn’t mean you are making a profit.
Get in the habit of recording your transitions promptly and regularly. How often will depend upon the volume of transactions you have. If you don’t have many transactions, bi-weekly may work for you. The more transactions you have, the more frequently you should be recording them in your accounting program.
There are many good accounting programs available that do not cost a lot of money. They help you keep track of your customers and your bills. You can look at your financial statements once you have entered all your transactions each month. Do this as soon after the month ends as possible. The quicker you have your statements, the sooner you can make adjustments that will benefit your business.
Make sure the program you choose allows you to set up any special options you need, like tracking inventory or billing customers. Choose a program that meets your needs without having to hire an accountant to keep it going, unless the volume of transactions in your business warrants it. Use an accounting program to save time and minimize errors. Today, you really cannot afford to use a manual system.
4. Involve your Family in Business
This can help get them on your side.
Tell your family members what is going on, including good things and challenges. Tell them in a way they can easily understand. That will help them see why you are so passionate about what you do and also give them a balanced picture of what is going on. They may come up with great ideas that you never considered before that will work in your business. Don’t assume they have no interest in the business. You may never have given them an opportunity to help before!
Plus, when your family is actively involved in what you do, they won't complain so much that all you ever do is work!
5. Ask for help when you need it.
Your family and friends can be more helpful than you may realize when you least expect it. In addition to keeping them involved in what you are doing, they can offer a different perspective on a problem because they aren’t in the middle of all the details of keeping the business going.
When you need technical help, remember to reach out to colleagues and professional groups that specialize in what you are doing. If the people in your physical area are your competitors and are not willing to help you, reach out to someone in a different market that you are not in direct competition with. Technology makes it easier than ever to connect with people who do not live near you. Both your family and friends and your business contacts can be great resources for you!
Use these 5 tips to keep your business on track and help you keep your cash flowing positively.
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God Bless your week!