We had a packed meeting today keen to hear Anna Golubeva's presentation on Cash Flow. She began with a quick Trivia quiz and then opened our eyes to why it is that 60% of small businesses fail .... essentially a lack of understanding of what cash flow is and does for your business.
Key points to take home:
- Understanding business income and expenses is the foundation of effective cash flow management. Having a clear picture of where your money is going helps to decide on the best ways to optimise your expenses or, alternatively, work on increasing your business revenue.
- For small business owners business income and expenses are often closely interrelated with personal income and expenses. Drawing down funds from your business sporadically to cover emergencies and irregular personal expenses leads to decline in business Net Profits or even brings Net Losses and undermines cash flow forecasts. It is crucial to have a clear separation of your business and personal finances and know how much your current lifestyle “costs”.
- To tackle the above challenges the Profit First approach can be adopted by your business. It will enable you to pay yourself first, get closer to hitting your business profit targets, ensure you have enough funds for taxes and make your business leaner. With separate bank accounts you will have clear boundaries for personal and business finances which in turn will optimise your business planning and cash flow management.
For help with understanding your cash flow, contact Anna in one of these ways:
Email: anna@financefirstcoaching.com.au
Website: www.financefirstcoaching.com.au
Phone: +61 413 468 024
Facebook/Instagram: @finance.first.coaching
