New Year’s Resolution: Understand Your Cash Flow
Small Business
For a small business owner, it’s an excellent opportunity to examine past successes and failures and to move forward with your business in the most predictable and profitable manner possible. Understanding how cash flow affects your business is a great step in maximizing your business’s potential.
Cash flow is the total money moving in and out of your business. A business with a high volume of cash flow isn’t necessarily successful unless that cash flow is positive.
Take for example a graphic designer who runs his own business. He receives revenue from multiple clients for contracted work, and his regular expenses include rent and utilities for a small office, advertising, a monthly fee for software and a few freelancers he occasionally hires. He keeps careful track of his income and expenses using a spreadsheet.
If he were to lose one of his contracts, he doesn’t know what impact it would have on his bottom line going forward.
If he were to use cash flow software like Pulse, he would be able to consult his projections for the upcoming months to see how this loss will impact his business’s cash flow in the immediate future. By learning from his past cash flow and projecting future cash flow, he will better be able to decide if he needs to make cutbacks in advertising or hiring freelancers in order to keep his net cash flow positive.
Pulse is designed to make it easy for small business owners like you to keep your eyes on the horizon of your money management. Do you intend to give your employees a Christmas bonus? Pulse can help you know when it’s smart to save towards that goal. Expecting a lull in business during the winter months? Pulse can keep you on track to meet your financial goals through quarter one and beyond by giving you a better estimate of future revenue. Planning a resource intensive project? Pulse can help you estimate how this will affect your bottom line for each week of the coming year.
In short, cash flow projection helps you make better business decisions.
In short, cash flow projection helps you make better business decisions.
As another example, what if your business hits a sudden wall? Maybe unfortunate circumstances force you to close up shop for a few days. With detailed cash flow projections, you will have a better idea of how long it will take to recover those losses and get you back on track. This will allow you to spend money more wisely in the meantime.
Perhaps a sudden rush of business leaves you with more cash on hand than expected. With Pulse, you can consult your projections and decide if this extra revenue is better spent trying to maintain your good fortune, or is best saved for an upcoming expense.
This year, resolve to make better business decisions. Stop spending money you don’t have on stuff you don’t need. Stop using that time-consuming spreadsheet that only shows you money from the past. You’re better than a spreadsheet.
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