C Is For Cashflow

Do You Know Yours?

 

Cashflow starts with C and so do cookies, cake and clients (monster not required) 😉

Do you know your cashflow?

It’s one of the most important factors in your business and good businesses can go under without it.

Getting the basics of good cash flow is essential and it’s not just about your business, it’ll help your personal finances, help you prepare your business for growth and is absolutely needed for having a limited company.

This post will help you understand:

• What is cashflow?
• What level of cashflow is good enough for your business?
• What level of cashflow is good enough for you personally?

 

What Is Cashflow?

 

Cashflow is often quoted and not so often explained.

It means having enough money to pay your bills when they need to be paid. (Sounds simple doesn’t it!)

Dry spells, feast and famine and seasonal income aren’t an issue in themselves.

It’s the cashflow problems that are created when your business (or you personally) depends on money coming in consistently with no gaps.

 

What are dry spells, feast and famine and seasonal income?

A dry spell is when you have an unexpected period of weeks or months with much lower than normal income.

Feast and famine is an unexpected pattern of income swinging between high and low.

Seasonal income is when a large amount of your income comes in one chunk (for example, Christmas sales or a once a year mastermind).

None are really a problem in themselves.

The stress comes when bills cannot be paid easily in the dry spell, in the famine stage or when it’s not income time.

This is when cashflow management comes in.

This is a thing for all businesses, not just smaller ones.

You know how employees are paid by their employer at the end of every month? Even global corporations have seasonal income, dry spells and feast and famine – and they need to manage cashflow just like you do so their employees are paid on time every month.

Cashflow management is a way to prepare for growth, to change to a limited company and to have a grown up business (oooh, adulting!).

Do you depend on money being deposited at a point in time so you can pay your bills?

 

 

What Level Of Cashflow Is Good Enough For Your Business?

 

Have a look at your business expenses.

Too many outgoing expenses for the flow of money coming in at any particular time makes your business vulnerable.

Tax-deductible expenses are great (those that come off your tax bill): they still need to be paid up front.

• How much money do you need every month to cover your essential expenses and obligations, including your drawings (the money you take out to live on if you’re a sole trader) or salary (if you’re a limited company), and tax and National Insurance etc.
• How much extra do you need for savings to cover emergencies, sickness etc?
• What would happen if several clients left at once or a lot of your clients paid late or not at all (bad debt)?
• When do you pay your expenses – can they be spread out or moved?
• What about feast and famine periods and dry spells? Most businesses have them – how much do you need to plan for it?

Where are the vulnerabilities and what steps can you take to start changing that?

It doesn’t need to be done all at once. Write an action plan and start on it (I can help if you need support and accountability).

If you want to grow your business, this is an absolute essential as cashflow problems is a big killer of growing businesses and I don’t want that to happen to you or the stress!

 

What Level Of Cashflow Is Good Enough For You Personally?

 

You have a small business or are a freelancer, right?

Have a look at your personal expenses.

Too many outgoing expenses for the flow of money coming in at any particular time makes you vulnerable and is a whole bunch of stress.

• How much money do you need every month to cover your essential expenses and obligations, including tax and National Insurance etc?
• How much extra do you need for savings to cover emergencies, sickness etc?
• Do you rely on being able to take money from your business whenever you need it if you’re a sole trader?

Where are the vulnerabilities and what steps can you take to start changing that?

It doesn’t need to be done all at once. Write an action plan and start on it (I can help if you need support and accountability).

Aim for a situation where your essentials are covered even if your business has cashflow issues.

Think about what you need to relieve pressure – mortgage payment, food, utilities.

Stress is an energy sucker and gets in the way of taking action. Even the process of working through the sums can help you feel more in control.

This is especially important if you’re preparing your business to grow or if you’re a sole trader considering a move to a limited company.

Start your action plan and you’re ahead of most business owners already (I can help if you need accountability).

C is for cashflow.

Is your cashflow good enough for you?

Time for the Cookies, Clients and Cake (and your Action Plan).

 

 

The Money Haven Resources:

3 Ways To Improve Your Cashflow (blog post)

Getting Paid As A Limited Company (blog post)

Self Care For Your Biz Finances Retreat (free)

 

Do You Know Your Cashflow?

Share with me on Facebook, Instagram or contact me.

I’d love to hear from you.

 

How I Can Help

If you are looking for a safe space and the support you need to look at your cashflow and create an action plan, book an explore call or email me.

Book your explore call (it’s free)

It’s time.

Looking forward to hearing from you,

To your financial self care,

Rosie x

PS. Have you joined me for the Self Care For Your Biz Finances Retreat (it’s free)?