Your cash flow is the lifeblood of your business. So how do you keep it flowing?
A little planning goes a long way. Too often, entrepreneurs only start talking about cash flow because they’re at a pain point. Even a healthy, profitable business can suddenly end up without enough money in the bank because nobody’s tracking what’s flowing in and out.
One of the easiest ways to fix that is by using a cash flow planner—a simple spreadsheet that shows on one row all the money you expect to flow into your business over the coming period (usually weekly or monthly). The next row shows all of the money you know you’re going to have to pay out. There’s a running account of your bank balance at the bottom.
When an entrepreneur sees what cash is coming in and what cash is going out, it makes it clear when there could be a cash crunch. If an entrepreneur pays staff every second Friday and March has three payday Fridays, that could be a tough month. You will need to put a little extra money aside in January and February to cover that triple payroll.