At what age did you realize Santa Claus was not real? I remember when I realized he was not real. I was in kindergarten and I was pretty excited that Santa Claus was coming the next day with the gift I requested from my mom. The next day came and of course there was the gift but no sign of Santa. Did I miss him? I finally connected the dots and realized mom had purchased the gift for me. I was disappointed. A lot of people know Santa is not real yet still they go through the pretence each year with their children. Some will go along with the charade as long as they can, before their little one figures it out or they tell them. Are they living a lie or a fallacy?
“We are most often inspired and motivated by fallacy rather than logic.” ― M.F. Moonzajer
Is this where you are with your business? Thinking it will survive another year without being cash positive? After all, the sales are at 6 or 7 figures, or they may be less, but you have convinced yourself or your team that your business will survive without positive cash flow. Your business cannot survive without cash flow. Cash flow is the lifeblood of your business. It is similar to the oxygen needed for the body to survive.
Many businesses fail because they are not paying attention to warning signs that they are heading for financial trouble. Your business is needed by your community, country, and the world at large. Of course, your business allows you to live your legacy now. Why would you risk losing your business by not paying attention to the key thing to ensure it survives? Why would you not be proactive when it relates to your business?
Let’s look at 5 ways to avoid sabotaging your business cash flow:
Do Monthly Bank Reconciliations
Your business bank account is not always updated with all transactions so be mindful of that when you are making decisions. Monthly bank reconciliation is often a neglected process in businesses. Doing a monthly bank reconciliation ensures that your record matches that of your bank. In addition, you can detect fraud, errors, and so much more.
Understand Your Cash Flow
Be aware of the various sources of your cash inflows and outflows. Importantly, be aware of the timing of both and when they will impact your bank account. The flow of cash is key when making decisions in your business.
Know Your Business Cycles
Business and environmental cycles influence your operations. It is important to understand the buying, payment, and sales cycles for your business.
Use Key Metrics
Look beyond the numbers in your business. Develop key reports to provide information to help you stop money leaks. Use “What If Analysis” to be innovative and proactive so that your business will not face bankruptcy.
Use Cash Forecasts
Use cash forecasts to know your starting and ending positions with cashflow for each period. Cash forecasts is integral for any business as it sets the foundation for strategy formulation, decision making, and so much more for your business.
As a business owner, you may not be physically doing these tasks. However, you need to ensure that they are being performed by reliable experts who are able to pick up quickly on errors and other red flags to minimize the risks to your business.
About Kirsha
When business owners find their businesses in financial chaos and are serious about taking the leap to say hello to cashflow and more, they reach out to Kirsha Campbell, “The Cashflow Maven.” A CPA/CMA, Kirsha integrates all the moving parts in your business to set up the right foundation to be recession proof, operate with reduced risk, increase cashflow, and set up effective systems and procedures. Kirsha helps business owners say goodbye to being overwhelmed, stressed, and frustrated about their businesses’ results and operations. Visit Kirsha.