A business can fail if it fails to plan for the future, and what cash it will need.
You will have probably heard this saying ‘Turnover is Vanity, Profit is Sanity, but cash is king’.
But why is this important?
Many businesses scream from the rooftops about their sales/turnover, but if they’re not making a profit, then what are they doing it for? And, even worse, if they’re making all those sales, but no one is actually paying them, then how will they pay their bills?
Cash in the bank is needed to pay the bills, buy supplies and pay yourself to live. Without cash in the bank, you’re not going to get very far!
So what does ‘Cash Flow’ mean?
Cash flow is the flow of cash in and out of your business.
You need more cash coming in, than going out each month if you want your business to survive and flourish. Yes, it’s a pretty simple statement, but it’s a very important one.
To do this, you will need to assess your cashflow each month to keep on top of it and ensure you have enough cash to pay for everything.
There are 3 key steps to ensure your business keeps a positive cash flow and flourishes.