Entrepreneurs can substantially improve their chances of success by doing the following:
Prepare a realistic monthly sa l es budget for at least 12 months and calculate, not only the number of monthly sales required to meet the budget, but also how much of the expected sales is anticipated to actually generate cash in the bank each month. It is of vital importance that selling prices or hourly rates are appropriately and correctly calculated with regard to the specif ic f inancial needs and requirements of each business (the gross profit must be enough to provide for the payment of operating expenses). Prepare invoices properly and accurately (if appropriate, request deposits from clients) and ensure that invoices are delivered as soon as services have been r endered or goods del i vered. It ’s extremely important to remind clients courteously on the due date about outstanding amounts that are payable. If surplus cash is available once all expenses are paid, a portion of the surplus should be retained in a bank or other suitable investment account for use when expenses exceed cash inflows. Finally, the well-known maxim of “turnover is vanity, profit is sanity but cash flow is reality” should be uppermost in any business owner’s list of financial priorities.
Thayn Niemand is a director of GC Grow.