Here are four actions you can consider applying in your business:
Look for trends where your cash flow was under pressure. Try to determine what the reasons for the cash flow “pinch” were. Are these events likely to repeat themselves in the next 12 months? What can you do to pro-actively plan the cash flow bridging of these events.
Ask your bookkeeper or accountant if you do not already have a cash flow forecast (12 to 18 month period) for your business. A cash flow forecast can help you to make more informed decisions about taking on more staff, changing your prices, tendering for a big contract, moving premises or changing suppliers. It also helps you to identify the suppliers who are instrumental in floating your cash flow. Once you know who they are, you can work on cementing the relationship with them, bringing about more business surety. It can also help you to pro-actively identify cash flow challenges, making it possible to plan actions to bridge the cash flow gap by acquiring finance, or planning on how to create increased cash flow over the impacted period. Understanding the consequences of just some of the main problems which may occur, can significantly reduce the impact they will have on your business – forewarned is forearmed!
The cash flow forecast can help you to identify areas in your business where expenses can be trimmed down. With costs you can decide to “keep it, reduce it or eliminate it”. A rand saved is a rand towards a positive cash flow.
When it comes to money, ignorance is NOT bliss. What you don’t know CAN hurt you.
Sandra S. Simmons (Author)
To support business owners with the important task of business planning, Sanlam gives you free access to the book Your Annual Business Game Plan for Success, which provides an easy and straightforward framework needed to draft a well-crafted game plan that will create the positive change and growth necessary for business success. Go to www.sanlam.co.za/gameplan to download your free copy.