Running a successful business of your own is something many people dream of.
However, when starting up a business many people often have to walk before they can fly.
The most common reason business start-ups fail is because they run out of money.
We’ve listed 5 tips on how to manage cash flow to avoid a startup fail:
1.Make a cash flow management plan
This is a very obvious and simple tip to take on board. Cash flow management plans will be different for all businesses, however some key areas to focus on are potential cash flow obstacles, daily operational expenses and the preparation for creating a positive overall cash flow.
2. Always keep some cash in savings
Ensuring you always have some money left in savings is crucial for any start up business. The reason for this is if any unexpected costs or bills come into action which you don’t have the funds to pay for it can often lead to difficulty. Many directors find themselves having to use their own savings or borrow on a credit card.
3. Get help managing your money
Many directors choose to manage their money whilst running the business, making money and doing everything else. This is not an efficient way of doing things, as managing money should actually take up nearly 80% of your time. Hiring an individual or accountancy company to do this for you is the best thing to do.
4. Don’t take on more than you can handle
As a director more and more business is what you want, however it’s important not to take on more than you can handle. Sometimes postponing or turning down work may actually work better in your favour, until you have figured out a plan to be deal with a heavy work load.
5. Look ahead a few months
It’s important to look ahead and predict how much cash you can expect to be coming in and flowing through the business in the future months. Look at how much business you’re likely to do, what revenue you might be able to achieve and when you will receive it. This will give you a good idea of what cash flow your business actually has.