How often does it feel like you are spinning your wheels growing a business but it does not pay you that much? Are you struggling with handling the ebb and flow of money? Are you constantly worried what will happen if you buy this social media marketing service to grow your audience, or if you make that trip? Are you constantly worried about meeting payroll, taxes, rent or even your own fees?

But it does not have to be that way. There is a way to tackle this problem once and for all. The best part is that you do not have to be a CPA, an accredited accountant or a financial analyst to achieve this. All you need is the right mindset, right tools and discipline. 

Handling cash is not easy at all, everybody knows that. It does require effort and work to set the right foundations. After going that phase, you have to keep monitoring in order to avoid unpleasant surprises. In the following post you will read the main steps you have to go through in order to achieve a state of business where

You will be able to monitor and control cash, and
Project future cash flows

So, a lot of your worries will go away. Not a bad situation at all, right?
Here is a mini-guide of what you have to go through in tackling the problem, at least start going about that:

Change of mindset: The first step is to accept that the only reason you run your business, the only reason that your business exist is to serve your customers. Not to serve yourself, not to cover family expenses, not to try out new gadgets. So have that on mind every time you make a purchase request to buy anything. Always ask yourself how this purchase will add to the value the customer is receiving, therefore making your business worth more. If it does not add value, then simply you should avoid buying that. If you cannot avoid, then delay for as time as possible. If you cannot delay, then go for the cheapest (but reliable solution).

Document everything: Cash is numbers on electronic documents (e-banking). So, if you want to control that, then you must control everything that affects this result. Yes, this means you must start writing everything down to a spreadsheet. You made a sale? Yes, you have to document every bit of information regarding that sale. Did you purchase new inventory? Yes, you have to document everything regarding this new inventory. Do you rent the space you use? Yes, you have to write down this item as well. 

Start measuring: We all know that accountants are considered to be the bean counters. Regardless of the debate on the matter, it is a fact that companies do pay for these services. So, it seems to be important that someone is measuring, and measuring to a detailed analysis. So, apparently this is something that you should start doing for your business and measure every aspect of your business. It should be easier now that you have documented everything. How much did you sell, how many inventory purchases did you make? How much did you spend on advertising or on supplies?

Add a time parameter to all your transactions:  When do you have to pay your suppliers? When is the next installment on your (business) credit card? When is the income tax due? These would add up to the cash outflows. Coming now to the cash inflows you have to establish the date that your customers should pay you. When you add up all the cash flow items, you get the cash flow of your business. Add the current cash balance and you get to see all the points in time when cash reserves are not enough, or when they are below the safety level you have established. 

Forward thinking: Start thinking forward. How much sales would you like to have in the next 12 months? How much inventory would you need to have to deliver these sales? How much liabilities would this create? On the other hand, when would you expect to collect the money from these sales? Now you see the gap in your cash flow. Now you know what the amount of cash is you are after, and you have a clear target to reach. 

Embrace your team to follow: You cannot walk this line alone. This is not possible, not feasible, not realistic. Do you have sales team? Well, explain them that there will be new rules to the game. Explain what the expected deliverables are beyond just getting orders from customers. Discuss with the secretary or admin department that they will have to apply a new reasoning when deciding on new procurement process. Well, when discussing with your accounting department, there is quite a few issues to stress out. From applying digital accounting and continuous closing to applying credit controlling and monitoring the profitability of the company, daily.

This is not easy to be done, and most probably it will not happen within a couple of days. It requires a lot of effort and work from you mostly and afterwards from your team as well. I have been working with financial controlling for the past 20 years. I have studied and researched this subject up to a MSc level. So, this guidance comes from a person who combines theoretical background along with practical experience.
Can I help you transform you business and your life? Nothing works by itself, and I don’t believe in magic. So, if order for this to work there are some prerequisites. Send me an email at Aethairion@gmail.com or fill in the contact form. What will happen next? We will arrange a web video call to check whether we are a good fit and work together.
Best of luck!