Why you should have a cash flow forecast

cashflow forecast planning Jun 10, 2020
Cash flow forecasting is critical in any business but lots of people neglect this area.
 
Imagine for a moment that you are wanting to buy a new car but you don’t have the cash for it.  You look at the options – you could lease, which would be more expensive but would only mean a monthly outlay, or you could save up to buy the car outright.  For each option, you would look at how you would save the money, or whether you could afford the monthly lease repayments.
 
You might look at your household budget, if you have one, or make a guess based on your bank balance, or just decide without looking and say you will put any shortage on your credit card.
 
Without planning, this could lead to significant debt.  You might choose a car that is more expensive than you can afford, or have monthly payments you can’t meet. 
 
It’s the same with having a cash flow forecast in your business.  How do you know whether you can...
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How lean is your business?

business cashflow numbers Jun 10, 2020
Do you run a tight ship, or do you keep spending money in your business?  
 
Running a lean business is key, whatever size business you are.  Overspending is a sure fire way to have you go out of business.  60% of UK small businesses fail in their first 5 years, and you don’t want to be one of them.
 
Examples of how to keep your business lean:
 
  • Employ freelance staff where you can, rather than employ them, until you are sure you can keep them on the payroll permanently.   Employing people can work out cheaper in the long run but only if you can guarantee work.  Freelance can be more flexible.
  • Make sure your marketing costs have a sold return on investment (ROI).  For example, if you are going to do Facebook ads, make sure this is factored in when you are looking at how much your offer is.  If you spend thousands on ads and are only selling hundreds in services, it’s not worth it.
  • Don’t have anything on...
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How do you measure success in your business?

business money success May 27, 2020
How do you measure success in your business? Is it all about the money, or does something else drive you?
 
For me, I know that I measure success largely by how much money I have in my bank account. I'm a numbers person, and I know this motivates me hugely. However, success to me also means having quite tight boundaries, so I don't work evenings and weekends as much as possible. I have 2 young children and being able to be there for them is really important to me. I want to choose to have school holidays off. In lockdown, these boundaries have become even more important as I love my business and could spend every waking hour on it! However, I need to make sure I have plenty of downtime as well.
 
I also value flexibility in my work, and I don't believe you have to work harder to be able to be successful. I am always looking for ways to make my business more efficient, and outsource things that take me a long time to do. I also try not to trade time for money too much, so...
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6 Figure Myth

In this week's blog, I want to talk about all the stuff I see online about "6 figure businesses". I think it can make small business owners feel that they are not getting it right if they are not doing this.
 
Don't get me wrong, I'm sure they are making 6 figures in their business but this is only talking about the sales they make. This isn't to be dismissed, but the bit they don't tell you is how much their business is costing to run and how much money they are taking out of the business for themselves. It may even cost them 6 figures to run their business!
 
It's expensive to run a 6 figure business, often with employees and freelancers working for the business, plus all the costs of various events they run and the software that is used.
 
I think it can be aspirational to hear about people doing well in their business, but it can also leave you feeling inadequate, especially if your business is just you.
 
Don't feel bad if you are not making 6 figures, focus...
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Financial Goal Setting

goals growth income May 06, 2020
Do you set goals? Any goals will do, but do you set them?
 
I set mine monthly at the moment, with everything going on, but usually every 90 days. I write one revenue goal, one systems or process goal, one launch goal and one social media/email list goal. That's it. I don't write 50 goals as I can't achieve them, plus it keeps me focussed. I put them on my computer lock screen so I am reminded of them every morning when I log in.
 
It is so important to set goals in your business. Time easily slips away and you find you are no further forward than you were 6 months ago. But making sure they are things you are going to work on and can aim for are critical.
 
When you set a revenue goal, do you just pluck a number out of the air, or take last month's number, or do you look at how that number will be made up? How much time will you be working over the period, what work are you going to do? Breaking down your goals into manageable steps is key to making sure you will...
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Pricing

expenses pricing Apr 29, 2020

When was the last time you reviewed your pricing? And how much do you give away for free?

So many people I come across give everything away for free. I'm not saying you shouldn't give stuff away for free and make it some of your best content, but too many people, especially women, don't sell after the free stuff comes out. And then we are back to it being a very expensive hobby.

It's important to check that your prices are competitive in your market place, especially if you are in a price driven market, but also make sure you are charging what you are worth, plus having enough to live.

When did you last sit down and work out how much you need to charge to cover your overheads? Do you know how much your overheads are, including paying yourself? What about how many hours you work? Do you take off holidays or have quiet or busy periods in your business? Do you work full time even? And how many of the hours you work do you actually do client facing work? What about the time spent doing...

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Passive Income

Do you have a passive income product? Do you even know what that is?
 
I didn't know anything about passive income until around 18 months ago and since then I've been hooked! It is anything that you can sell in your sleep, from ebooks to masterclasses to online courses. They are usually lower price points as they don't involve interaction from you.
 
The idea that it is "passive" is a bit of a misnomer though, as it takes a lot of work up front to create a course, ebook or masterclass. But once you have done it once, you can sell it over and over again, so that becomes passive.
 
I think every small business should have something passive to offer as, over time, it will give an underlying source of income in your business. If you've always wanted to write a book, or create something more accessible for your clients, this is a great way to do it.
 
Be careful of creating a lot of content before you have sold places though. Lots of people create a huge course of...
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The Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) has been revamped from Monday (6th April). They have reopened the scheme with a promise to approve more loans (not enough have been approved so far).
 
The criteria are:-
Turnover < £45m
UK based business
Be an ongoing business, if it weren't for the pandemic
Certify that you have been affected by coronavirus (self certification)
Open to sole traders and limited companies

You will need to provide the following:-

Outline what you need (how much and why, plus how long the loan would be for)
Historic accounts
Management accounts
Up to date business plan
Cash flow forecast
Assets in the business

Plus:
Profile the owner and/or management team
The owner’s investment in the business
Whether or not security is available
Other business interest
 
If you are business less than 2 years old, you could apply for a startup loan instead.
 
I can help you with providing the information you need for a CBILS...
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Why I'm still selling

This week's blog is a bit different. I feel I need to address the elephant in all our rooms and talk about coronavirus.
 
We live in weird times. My young kids are at home with me and my working schedule has been seriously interrupted as I try to homeschool. I thought it would be nice to have a break over the weekend, but actually structure is important to all of us so trying to think about ways to entertain the kids over the weekend (2 boys can't just hang around all day especially at 7 & 5) and have a break from work was tougher than I anticipated.
 
How is your business doing at this time? Are you thriving or surviving? Trying to juggle it all? Or feeling like you don't have a business left to keep going with?
 
Try not to be limited by your existing business. I have seen loads of great things that people are doing - online pilates, online dog training, vouchers for when restaurants reopen, and paying a deposit to be able to book first when your hairdresser...
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Getting the basics sorted out

finances planning support Mar 25, 2020

Last week, I had some interesting questions with two of my clients. One said that they were putting me on hold as they didn't have enough work for me due to coronavirus and another said they were so glad they were working with me as they need to plan for the lost of income due to the events side of their business.

Now is the time to know your numbers. Look at the following:-

  • Expenses - annual or monthly ones. Can you stop any of these if needed?
    Revenue - talk to your clients about what their expectations are and work with them as much as possible to find a good solution, rather than waiting for them to cancel.
  • Cash - do you know how long your cash will last for?
  • Get a breakeven number (where revenue equals costs) so you know what income you need to run your business.
  • Invoice promptly at all times, but especially at the moment, and shorten your payment terms where you can. Chase those debts soon after they are due as the financial position of companies is changing all the time.
  • ...
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