Raj Kapur - "Guidance to Wealth"
IBGR.Network - PROFIT Radio. Everything a business owner needs to start, grow, or exit a business. Grow With Us. Introduction The old saying that 'cash is king' is never more accurate than when dealing with a small business. When you first start a new business, it can feel overwhelming as you are surrounded by a multitude of things to do which includes all the back-end operations, sales, marketing … you know what I am talking about here. Many times Cash flow takes a back seat .. which can be the biggest mistake and one of the causes of small business startup failures. Cash Flow or what is commonly referred to as Working Capital is the heart of any business,” “Without it, a business cannot survive. As a Small Business, understand that a cash flow statement is a mandatory statement that records cash and cash equivalents that are coming in and leaving the company. The key function of the CFS is to let investors and lenders take a look at how your company's finances are being managed and where your cash is coming from. Show Objectives In business, cash is always on the move. The cash flows into the account when customers pay for their purchase, when a loan is received from the bank or other source, interest is received or when any assets are sold. Cash flows out of the bank account when suppliers are paid, wages and salaries are paid; interest is paid to the bank, and so on. The difference between the cash inflows and cash outflows during a specific period is known as the "net cash flow". Tips on Understanding Cash Flow as a Startup Understand and record cash flow projections Profit does not equate necessarily to cash Unanticipated expenses and emergencies e.g. Covid-19 Marketing Expense exceed sales Late payments can cause major cash flow disruptions Faster Growth in the company What to Do to Manage your Cash Flows Spend slow and have it paced out Outsource - Save on hiring costs Pay Yourself First Discount for early payers Negotiate terms - both on Receivables and Payables Use a Charge Card Negotiate on everything in your business A few more things Understand the cycles of your business and then use to forecast cash flow Keep separate Business & Personal Accounts including credit cards Pay your bills on time - On Time… not early Get a handle on your Invoicing and make sure you are paid on time Lease or finance equipment including office and IT equipment Build cash reserve and invest a portion back into the business Get a Line of Credit Look at hidden opportunities in your business Revamp your marketing strategies to generate more sales Understand the Slow seasons and use Social Media (if possible) to reach out to your customers Understand your money - It is your money Statistics Overall, 90 percent of small-business failures are caused by poor cash flow, according to Dunn & Bradstreet According to the Receivables Exchange, small businesses now wait nearly 50 days on average to get paid Shows Previous: 5 Steps to Grow your Business & generate more money - Raj Kapur Next: S4.05.3NA Hiring Talent - Raj Kapur Written by: Raj Kapur www.RajKapur.com www.NonProfitEdge.org
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