19 Mar Are you being an ostrich with your business reality?
Know your numbers OR you will become a number!!!
Too many business owners (95%+) DO NOT do cashflows for their business. This is absolutely LUDICROUS considering that cash to a business is like oxygen to a human body.
Experts, books and anyone with any economic training espouse that CASH is KING, yet owners in the small business world think they are EXEMPT and do not need to measure it, track it or know it. Sounds stupid right and I am sure you are not this type of person …
Your bank balance does NOT tell you your cash position, only a cashflow will! You need to know;
- what cash you have coming-in in the future
- what cash is due to be paid in the future, and
- how much cash you should be storing for larger bills coming up like tax, BAS or debt reduction lump sums
Your bank account does NOT tell you this, only a CASHFLOW WILL!
Not knowing your true cash position now and in the future has you guessing at what is REALLY happening now and what will MORE THAN LIKELY happen in the future.
If you are driving a vehicle fast towards a massive cliff, it is a great idea to know that this is happening, as soon as possible, to GIVE YOU TIME to change your speed and direction to avoid the CATASTROPHIC disaster that is coming. Your business is this vehicle.
IF you do not put CASH away for tax, annual leave, workers compensation, GST/BAS, upgrading of equipment, etc – you get the bills for these or the need to replace something fast in order to keep the invoices going out to clients and CANNOT pay them. This continues for a period of time and you are in big trouble. This is the massive cliff I described earlier.
This is why MOST of the small business owners quit business for themselves or lose everything, as they are sick of the stress, can’t handle the cash and sick of making profit but never having cash to pay themselves and spend.
To determine if you are driving your vehicle in the best way, or you are going to become a casualty of the small business owner world into the abyss at the bottom of the massive cliff, answer these questions to determine where you are at now …
- Do you know what your cashflow will be (to the cent) in 1 weeks’ time, 1 months’ time and 6 months’ away?
- Do you know (for absolute certainty) if you can pay the wages or need to extend your overdraft or can pay for that family holiday in 6 months’ time?
- Has your accountant TAUGHT you the importance of a cashflow and WHY you NEED to have one?
- Have you got a history of the last 3 years of cash movements in your business week by week on an annual basis that shows you the patterns of cashflow you can expect going forward?
- Do you know WHY you are making profit in your business YET always seem to never have any cash?
If your answer to ALL or the majority of these questions is NO, then you NEED some HELP ASAP.
Your choices are simple from here;
- Don’t believe me and hope you are lucky going forward
- Ask your accountant why he has not brought this to your attention before and then get him to TEACH you how to create one, not do it for you! (Otherwise you will be paying him for years to something that is simple and you can easily do yourself)
- Have a 3rd party who is an expert in business and cashflows (yes, I am one of them) to help you do this
Get smart NOW! Build a cashflow for your business that captures each transaction IN and OUT for every day and project it forward so you can say YES to knowing your cashflow position in the past, NOW and in the future.
I want you to be the STRENGTH, not a NUMBER that measures causalities of business!
Choose wisely and be great