How to Manage Your Cash-Flow and Grow your Business - Are you Ready?
Updated: May 14
A Financial Management Guide for high-growth Startups and Small Business Owners
Trying to manage a business without a proper grasp of your cash flow is like swimming in treacle, it's slow progress, you'll get dreadfully sticky, and it's not much fun.
For small business owners, discover proven ways to manage your cash flow better and gain more harmony with the understanding you can take assess any challenge or opportunity that comes your way. Learn how to build a robust and durable business with smart cash flow management principles.
Learn the main elements that make up your cash flow and key indicators you need to keep an eye on.
Appreciate Your Money Stream
Cash flow and financial management are crucial requirements for all successful businesses, but it's essential for newly formed companies and early-stage startups. If you struggle to grasp your cash flow financial management within the first twelve months, you will unlikely withstand your business over the second year.
Inadequate cash flow management may cause your company to be short of the required funds to be able to pay your supplier bills and cover your urgent operating costs. If your business continually spends more than it earns, you have a cash flow problem.
Securing an overdraft facility or a short-term credit (i.e. soft family loan, bank loan, or using credit cards) is an option and does help you in a crisis.
Once you've consumed all the available credit, you're left still requiring cash injection and facing the possibility of having to close your business – either temporarily or permanently.
Regular Cash Flow Analysis
A good tip is to form a practice of checking your cash flow and analysis the different streams of cash in-flow and outflows regularly. As you scale your business, you may employ people to do this for you.
Typical areas business owners should aim to check regularly are:
Accounts Receivables: Once you've created your invoices, this is the area that customers owe you. You want to present your customers' attractive payment terms while maintaining your flexibility.
Accounts Payables: Everyone likes to buy "stuff" and when you run a business its no different, accounts payable is the money that you owe your suppliers and could be for your accounting software, materials, travel costs. Like your business, suppliers will want to optimise their cash-flow and will be looking for payment promptly.
Short term debts: In addition to the regular ongoing operational spend, you may have other commitments, i.e. Bank loans or credit cards, that require consistent reimbursement.
If you're struggling to pay the owed amount, make sure you talk to suppliers and try to agree on a payment plan that satisfies the debt and helps you to continue still operating your business.
To be successful with your business, it is helpful and a necessity for you to manage all these aspects of financial planning and management.
Advance Your Cash Flow Management
One of the best options for small business owners is to have a grasp of the different methods to acquire payments quicker and safeguard your business operations by having sufficient cash available to keep your business operations running.
Try to manage customers and clients that have a long-standing debt with you and be firm with them on payment terms.
Having a disproportion amount of clients that owe you money or if you owe your suppliers too much, can have an impact on your cash flow variability, which will ultimately impact your business.
Review your pricing strategy and ensure you're remaining competitive with the market place. Often companies maintain their prices to retain customer loyalty, and this in the long-run will have a detrimental impact on your business profitability.
Having a strategic business plan, articulating your short and long-term goals, helps to focus your attention and provide you with a platform to help scale your business. It's also an essential tool If you would like to seek bank financing or investor funding.
By continuing investing time, resources and planning your financial management processes, you will guarantee your business operations are as efficient and streamlined as they can be.
Here are other usual articles on Financial Management for Small Business Owners:
Quickbooks Financial Management: 10 Tips for Managing Cash Flow
Xero Software: Why use Financial Management Software?
Small Business UK: The fundamentals of financial management for small business:
Small Business Development, Canada: Taking Control of Your Finances
Small Business Development, Australia: Financial Management
Ready to Control Your Cash Flow?
It's pivotal for a business to have autonomous procedures and streamlined business processes to provide the best chance of ongoing business success and scalability. If you require help scaling your business operations, check out our future scale-up articles for more insights.
To learn more about Noirwolf Consulting team, and how we can help you scale your business operations, then send us an email and let's talk.
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