Cash is king as they say… and unless you keep a tight rein on the cash flowing through your business, every day will present another struggle, and you’re going to find it extremely difficult to grow your business!
Many speakers focus on the turnover number… the amount they just made from stage… or the big payment they’ve just received from a client. But, too often, their business cashflow management processes are lax… and as fast as the cash came into their bank, it’s all disappeared – where did it go?
So they find themselves having to do another gig just to get another big payday… and so the cycle repeats again and again!
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 cashflow.
Today I would like you to think about your own business cashflow management… have you got good processes and systems for monitoring your business cashflow, and ensuring the cash keeps flowing?
What is Cashflow?
Cashflow is in simple terms, having enough money in your bank accounts to cover what’s going out.
In your speaking business, revenue can be cyclical… up and down, up and down. Some expenses are specific to your events, but there are other expenses such as staff wages and computer expenses that are operating expenses and will happen all year round… whether you put on an event 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 my top 3 tips for effective business cashflow management.
Planning for taxes:
Some businesses actually transfer a portion of their revenue into another bank account to cover GST/VAT. Separating it out when you receive payments means you know it’s not really ‘yours’ to spend, and that you will have enough cash there when the bills come in.
Create a financial calendar:
Having a financial calendar is a great idea. Along with all your dates for your gigs, events and product launches, you also add in the due dates for your payments and returns etc.
The other great thing you can do is a projected cash flow statement. 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 at each.
Then add in your expected expenses and costs, and each month, keep a track of how it’s going… comparing 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.
Solving an existing cashflow problem
Despite your best efforts, sometimes unexpected costs can arise and your cashflow will be squeezed. So what can you do if there’s already a cash flow problem?
- Collect your debts – do people owe you money? Get on the phone and ask for it now.
- Reduce your expenses – are there expenses you can cut or delay? Can you get longer payment 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.
Hopefully this has helped clarify how important it is to manage your business cashflow? If it all feels a bit overwhelming for you, then have a shop around and get yourself 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… getting good advice upfront can make the world of difference to you and your business.
How do you keep on top of the cash in your business? Do you have a system or process you’d be happy to share with our community? Please leave a comment below, as your suggestion may just help someone who is struggling right now