My heart is beating with joy! I have recently been doing some posts about cash flow planning and the simplicity and importance of it in small business! Well I have a client (whom we sincerely love) and this small business (seemingly successful) has really been struggling to find answers, including answers to cash flow…. I kept reaching out and this morning sent an email with some easy action steps and want to share those action steps with you, because I learned that if you can improve one thing a day, something super simple, in one year you have improved 365 times! So here you go!
This client came to us this afternoon grateful for the seemingly simple advice which they feel they can start implementing… As complicated as it all sounds, one step at a time, you will get there! What a few hours a go was overwhelming, now seems hopeful, manageable! Here are the excerpts from my email:
A quick solution to some of the cash flow issues, even if you can’t implement everything, try and tackle at least one or two things a month, it will eventually come into alignment.
1) Open up another bank account (Get a Free Bank Account, They are Out There… You don’t need to share that it is for HST or Payroll and you can often earn points);
2) Every month when you see your total sales calculation add 13% tax and put that HST money in that account;
3) When your bookkeeping is complete and you know the proper amount of HST for that month (which will always be less than the 13% due to itc credits), add the difference back into your store account giving the business an influx of cash. Make a plan for that cash prior to putting it in… see where it can be most effective!
4) Do the same thing with your payroll deductions as your HST. That way the money is always there when required.
5) Start building up a savings in your business… start small, but something, if you cannot do the recommended amount, do something! SOMETHING is better than NOTHING! A Great calculation which will help keep you on track is Save 10% of total income; 20% to debt repayment and 70% on expenses. If this can’t work yet, then you have two options (save a little less 2.5 – 5%, if your debt is big spend 25% and 70% on expenses)…. If this still does not work, then you have two options, take time to make that 70% work or find ways to increase your income).
6) Read your financial statements every month. FBZ has a high value piece for you to take advantage of. Please take advantage! When you pick up your monthly package, and if you call in advance, you are able to spend 25 minutes and go over your financial statements with FBZ staff. This is not meant for business advice (that is what our consultations are for) but to ensure that our clients can read the statements and practice doing it. You can ask questions. We also have free Tuesday calls ins when scheduled, take advantage of this.
7) Every quarter you are entitled to a basic cash flow plan, let’s sit down and discuss what we need to accomplish this, it’s amazing, this clears up a lot of garbage! It’s also a matter of establishing plans around collection of receivables in order that you can actually pay your payables. I took a stand and I’m standing firm in my stance and for the first time in six years, I am able to establish a plan to pay off debt, pay my bills on time, save a tiny bit of money and look at what needs to be invested in. I feel empowered and I’m not looking back. Maybe what I’ve done won’t work for your business, but there are other things that you can do to improve cash flow. Let’s brainstorm together! MAKE IT REAL!
I hope you also find this email helpful, I have taken out the confidential information, but it shows you that yes, you can make it happen, you just have to make the decision and starting with something is better than staying stuck and losing sleep!