It seems there’s a lot of you out there hungry to know how platform speaking can skyrocket your profits.
So, let’s look at how to manage your money Our GM, Donna Powell has stepped in here to provide a few tips for managing cash flow in your business.
So often in business people talk about revenue or turnover – how much money is coming in the door. Let me ask you a question?
Revenue in a business is important, but profit (which is revenue less expenses) is even more important. There’s one thing though that’s even more important than profit… and that’s cash flow.
Cash flow is in simple terms, having enough money in your bank accounts to cover what’s going out.
In many event related businesses revenue can be cyclical, up and down, up and down. Some expenses are specific to the event but there are other expenses such as staff wages and computer expenses that are Operating Expenses and will happen all year round, whether there is an event on or not. And it’s important to make sure you have enough in the bank to cover these.
So What Can You Do To Make This Easier?
Here are 3 tips to manage your cash flow easier.
- Some businesses actually transfer a portion of their revenue into another bank account to cover GST/VAT. Separating it out when you collect it means you know it’s not really ‘yours’ and will have enough there when the bills come in.
- Having a Financial Calendar is a great idea. Along with all your dates for your events and product launches, you also want to add in the due dates for your payments and returns etc.
- The other great thing you can do is a projected cash flow. Firstly map out your estimated revenue for the year, based on when your events or product launches are and how much you expect to sell. Then add in your expected expenses and costs. Then each month, keep a track of how it’s going and compare the actual figures to your estimate so you can make sure you’ve got enough money in the bank to cover everything that’s upcoming.
How To Solve A Cash Flow Problem
Despite your best efforts sometimes unexpected costs can arise and cash flow can be squeezed.
So what can you do if there’s a cash flow problem?
- Collect your debts – do people owe you money? Get on the phones and ask for it now.
- Reduce your expenses – are there things you can cut or delay? Can you get different terms from any of your suppliers?
- Increase revenue – have a launch of a new product, get on a stage somewhere, run a webinar, do a special offer or sale on products to get some more revenue coming in.
I hope this has helped clarify how important managing cash flow is in your business. If it all seems a bit much for you, then have a shop around and get an accountant. Just as you are an expert at your topic, they are the experts when it comes to helping you to plan and manage your finances in your business and getting good advice upfront can make the world of difference to you and your business.