Business owners, let’s pretend that its March 2020 again. How did you feel? Did you have someone to turn to? Likely its not a good feeling. You probably feel uncertain of the future and don’t know who to call for help.
No doubt you never want to feel this way again!
As a business owner myself, I felt the same way. At the start of the pandemic, we had to completely shift our business from an in-person office environment to completely remote.
I experienced this uncertainty myself – what would my business look like next year? Would my team be as productive working from home?
Although we were able to stay open and serve our clients, Yelp reported at least 60% of the small businesses that closed due to the pandemic won’t be reopening.
You may be wondering: “Will my small business be next?”
To avoid that outcome, you need to have a good handle on your business’ cash flow. Thousands of small businesses without this fail each year.
What is cash flow?
Cash flow is the movement of money in and out of a business as goods are bought and sold.
Many often confuse earnings with cash flow, but there is a striking difference between the two:
Earnings consist of sales and/or services that make you money (money coming in).
Cash flow, on the other hand, includes your earnings but also takes into consideration costs and expenses (money coming in AND money going out).
Why is cash flow important?
If you don’t understand your business’ cash flow, you’ll be out of business before you know it. For example, we have had clients with amazing sales month after month. But their expenses were astronomical. This caused them to take on a tremendous amount of debt and they eventually had to liquidate their business.
Unfortunately, these situations happen far too often.
Where to start?
I cannot stress this enough – hire a bookkeeper with tax knowledge. You need a bookkeeper or a team around you that will not only tell you how much money you have in the bank, but will also help you to understand your cash flow – whether or not you have enough money to pay your team, your taxes, your expenses, etc. This will help you to grow.
The primary questions I like to ask clients are: What is your end goal? What do you need your sales to be? What do you have to limit your expenses to? Where do you see your business in the next year? 5 years? 10 years?
Meditating on the answers to these questions can help you set goals and stick to them. Furthermore, this can help your bookkeeper or CPA know the way in which to guide you to aid you in making AND saving more money.
In short, if you’re not sure where to start, let’s talk. I want you to keep more of your hard-earned money. Together, we’ll work to keep your business afloat, no matter the financial climate. Email firstname.lastname@example.org or call 203.698.7700 to schedule your complimentary appointment.