Small business owners spend hours tinkering with their business plans, conducting market analysis and refining their marketing strategy, and yet many still fail within the first year of operation. More often than not the reason is simple; poor cash flow. To grow your business and stay afloat, effective cash flow management is essential.
Here are some crucial tips to help you better manage your cash flow:
1.Don’t over complicate your accounting:
Not everyone is great with numbers and that’s ok. Hire an accountant and let a professional do the job for you, freeing up your time to focus on more impending tasks. Better yet – invest in some accounting software that automates many of the dull and time-consuming accounting tasks that you always deprioritise.
2.Don’t mix your personal and business finances:
If you don’t have separate bank accounts for your small business and your personal life, how can you expect to have a clear view of your cash flow? Mixing the two is a surefire way to get confused about business performance and will result in over spending. Keep things separate for a clear idea on how much revenue you’re actually making.
3.Budget to your heart’s content:
It’s not the most enjoyable task, however setting time aside to calculate projected cash flow versus expenses is crucial to business survival. Take into consideration billing cycles, business overheads, salaries, suppliers and of course cash to pay yourself!
Never hesitate to invoice once you’ve delivered your product or service to a customer. If you’re dealing with multiple projects, it can be easy for invoicing to slip your mind, so make it a habit of invoicing on a daily or weekly basis. You might even consider invoicing half your payment up front.
5.Plan for the worse:
Regardless of how well business is going, you always need to be prepared for the worst. Build up a healthy cash reserve for a rainy day so your business isn’t heavily impacted when the worst happens. Having some cash set aside will also enable you to take advantage of any new opportunities that arise.
There you have it, follow these 5 tips and get your cash flow back in order. The growth of your business depends on it.