5 Ways To Create Strong Predictable Cash Flow For Your Business

Cash Flow is the life blood of any business, below are 5 non negotiables to ensure strong predictable cash flow in your business:

1.Have a plan

Firstly, you need to have a plan in place. This means that you need to envision what your business will look like when it is finished, i.e. what is the end game in terms of valuation and your ultimate exit from the business? Once you have clarity on the end goal it is important to break down goals into a 90 day plan for your business that is then further broken down into monthly, weekly and daily goals for all teams and employees in the business. All goals must be SMART i.e. Specific, Measurable, Achievable, Realistic and with a clear Time Frame. 

2.Knowing the right numbers at the right time

Business owners that don't succeed are often not close enough to their numbers, it is vital to live close to your numbers and understand the key numbers in your business. Knowing the right numbers at the right time ensures that you can implement strategies to keep cash flow on track. Most important is to have a cash flow forecast for at least 90 days into the future that is updated at least weekly. Make sure that your accountant gets your numbers to you within 5 days of month end and that you are clear on the key metrics and ratio's that drives cash flow.

3. You need to understand the basic fundamentals of accounting and tax

You do not need to upskill yourselves to the level of an accountant but it is important that you develop a basic knowledge of all the applicable accounting and tax fundamentals and time lines.  This will ensure that you can ask the experts the right questions and that you will never be blind sided by tax liabilities, revenue services audits etc. 

4. Working capital management

Sloppy working capital management is one of the leading causes of cash flow problems. It is critical that as a business owner that you have accurate information  about the working capital investment in your business and that you monitor the key ratio's impacting cash flow on a regular basis in order to implement corrective strategies in good time.

5. Marketing plan

Often when cash flow is tight business owners are reluctant to spend money on marketing, often because they believe it does not work.  When you do the right marketing, leads and clients coming into the business increases dramatically and doing that on a consistent basis is core to long term sustainable cash flow. Once again the numbers are important, for example what is your customer acquisition cost vs. the lifetime value of a new client? Consistently implementing a clear marketing plan with at least 10 marketing strategies is fundamental to strong sustainable cash flow.

If you are lying awake at night worrying about cash flow in your business contact us for a complimentary business coaching session at hbdm@actioncoach.com