If money isn't flowing into your business, then you really don't have a business, do you? Plus, how can your business actually support you if it isn't making any money?
Businesses are meant to have a cash flow, both in and out.
This means that you need to create a cash flow plan for your business. You'll want to create your business budget first, and then create your business cash flow plan.
The budget comes first because you need to know how much money you need to make at a minimum each month to make your business successful.
What is a Cash Flow Plan?
A cash flow plan is a way of predicting how much money your business is going to make and spend each month, to make sure that you don't run out of cash.
If you don't have cash in your business, then you can't pay your bills, you can't pay your assistants, you can't pay your taxes and you can't pay yourself.
You have a business, so the cash should be flowing.
This is a plan that you set months in advance (but it can still be changed) to actually plan out how you are going to be making money in your business.
You know how there are certain business owners who are just flying by the seat of their pants and launching products and courses and services whenever they need to without a plan?
These business owners do not have a cash flow plan in place.
When you have a cash flow plan in place, then you know what you are launching and when ahead of time because you know how much money you need to bring into your business. And you created a plan to market your business.
Plus with a cash flow plan, you will know when you need to increase your prices, decrease your prices or just sell more.
It helps you create your marketing plan in your business, as well.
Most businesses have fluctuating income. You can plan for certain cash influxes at certain times of the year, like holidays and different seasons.
But when you have a cash flow plan in place, your income doesn't fluctuate as much because you are strategic about what you are doing in your business and when you are doing it.
With a cash flow plan, you are regularly bringing in money before you make your business bank account go negative because you know what you are selling and when without having to make split second decisions to sell something right now because you need a cash injection.
When your business goes through seasons and even lulls, you will be prepared ahead of time because you know what your cash flow plan looks like.
And you can base your cash flow plan off of the previous group of months that you are planning for.
For example, right now you are creating a cash flow plan for the next 12 months. Since you already have your budget created and know how much money your business needs to make to at least break even, you can easily calculate how much of your courses and programs and services you need to sell.
Also check out: Making Your Business Recordkeeping Easy
What does a cash flow plan look like?
Why a Cash Flow Plan?
I know you are thinking, "Great, another set of numbers I have to deal with!" and are probably exasperated that you have something else to track.
If you want your business to succeed down the road, you want to have a cash flow plan in place in your business.
Plus if you do your bookkeeping on a regular basis, it is easy to just type in your numbers from your profit and loss statement each month right into your cash flow plan to make sure it is flowing and accurate.
A cash flow plan may sound hard, but once you do it a few times and then also plug in your actual numbers, it becomes easy.
When you have a cash flow plan in place, you'll start to make more money in your business as well, because you know how much money your business needs to make, and you have a plan in place for what you need to sell in your business.
You can easily start expanding on this plan as well each month to make more money in your business.
Finally take your taxes from frustration, chaos and confusion to calm and organized.
Learn everything you need to know to master your business finances and taxes explained in plain English.
Create Your Own Cash Flow Plan
Here are some simple tips to help you create your own cash flow plan in your business, as well as a way that you can get your own spreadsheet to complete your cash flow plan.
- Create your business budget. This will allow you to know how much money at a minimum you need each month to keep your business operating. It will also allow you to create your cash flow plan so that you can make even more money than you need to just keep your doors open in your business.
- Plan out what you want to sell in your business over the next 6-9 months. You can get an idea by looking at the past year's worth of income. Or if you are new to business and haven't made much (or anything) in sales yet, you should have a general idea of what you want to sell to start making money in your business.
- Plan how much you want to pay yourself in your business.
- Account for saving money for your taxes. I recommend saving 20-30% of your income for tax purposes and my cash flow plan that you can purchase accounts for 20% savings
- Complete the spreadsheet for your estimated cash flow plan. Then at the end of month, complete the one for the actual and see how they compare. If you were way off on your estimated plan, then edit your next couple of months in the plan.
- Remember that this is a plan. It can easily change. It's not set in stone.
Your cash flow plan will allow you to plan out your income in your business. It will allow you to know exactly how much money you are planning to make in your business and it opens the doors to your bringing in even more money every single month and allowing your business to continue to grow.
Would you like assistance with your cash flow plan? Head over here and book your session to get a Profit Game Plan in place in your business.