Cash flow Questions worthy Your Consideration

Cash flow is vital to the health of your business, one saying goes “revenue is vanity, cash flow is sanity, but cash is king.” What this means is that while it may look better to have large inflows of revenues streaming in from sales, the most important focus should be turning these into cash inflows.

Many businesses tend to handle short and medium term credit sales, say sale on 15 to 30 days credit or 60-90 days credit. This becomes very comfortable were you can delay payments to your suppliers or you have enough capital to settle you variable costs. However no business can survive long without steady and convincing cash to meet its immediate needs.

Follow conversations between CEOs in large organizations with their CFO, the common question is “do we have enough cash for this …… then can you arrange for back up funding from………” this kind of conversation should not be the case in your small business or start up. You need to know first hand since you are most likely the CEO/CFO/Owner.

 "Every small business owners should be able to print a profit and loss and balance sheet statement any time and calculate cash flows right now when need arises."

If you find yourself wondering if cash flows is so vital – always remember cash is king and it’s the number you should be following on a daily basis.  Now how do you develop in to a cash flow freak for the sake of your business? Ask your self and your accounts team these questions frequently.

1    1.       What is cash or cash flows?

Cash and cash flow are not the same thing, according to the English vernacular Cash refers to money in the physical form of currency, yet in business its current assents comprising currency or currency equivalents that can be accessed immediately or near immediately for payments. In our case we will call it the petty cash in office and balance at the bank.

Cash flow on the other hand is the movement of money/cash into and out of the business in a given period of time. Now if you can track this movement, you will realize at end of period you paid out more cash than you received (Negative cash flows) or you received more cash than you paid out (Positive Cash flow). Now watch if your company is profitable on paper (statement of comprehensive income –income statement has it used to be called) and yet maintaining a negative cash flow for an extended period of time, this might drive to out of business faster than completion or anything else could. 

Being able to calculate and monitor your cash flow position regularly is critical to your business existence. 

2    2.       Are we looking for cash flows in the right places?

When you ask yourself what your cash flow position looks like and you do is draw out your latest bank statement, just know you are fishing out the wrong figures. Your business bank balances shows your cash on hand. It will never show you what your cash movements are or more importantly how to improve it.  Now you need to look for were you spending money, who is paying you and who is not paying yet they should be. When you are well grasps with that, and then you can manage how fast you should be paid.

3    3.       Are we relying on estimates?

Estimates are you used for planning purposes, don’t rely on them when you are analyzing your position and looking for solutions. Then comes the trap formula of simply taking your bank balance then adding all your sales and projected sales and labeling them as cash inflows, then subtracting all bills and other payments you make or may make within the period then claiming you are projecting cash flows, simply put this is suicide because some might be credit sales and worse so some credit clients will never honor their agreed payment period, by the time you realize its wrong it may be too late. 

4   4.       Are you waiting for your bookkeeper to tell you your cash flow position?

When you find everyone else and most especially you depending on one person your accountant for this position, know the situation is already bad and you don’t need weeks or months to realize things are not right and you cant pay bills or payroll. Some people will call you mad and they may be right.

Every small business owners should be able to print a profit and loss and balance sheet statement any time and calculate cash flows right now when need arises. 

If did like this article, please don't forget to make official our friendship and follow Business insights on Facebook

 

By Andrew Ekwang. Business writer with Business Solutions

College/University Entrepreneurs:

How to make the Most of your Education when starting a business

 

Are you in a college or University and still contemplating whether to start a business? Or you are convinced entrepreneurship is not for you – it’s expensive, and you have no time?

Deciding to start a business while at school can pose quite a dilemma, but there is good news it doesn’t have to be one, actually this is the best time to start. In fact starting at school can give you the tools you need to get your start up on the right foundation.

This is how you can get the best of academic world by leveraging on the resources at your college or university to start a business.

Double sword lesions taker

Taking classes related to your start up idea, since you will be working toward the successful completion of your degree, as well take a few classes in a field related to your start up, and trust me this might come at no extra cost maybe time.

So don’t hesitate to use your college start up idea as inspiration for academic projects and papers. That way you’ll keep refreshing and refining your business idea and still receive credit for your degree. And if your idea passes for a group assignment, you just have free labor refining and polishing your business from classmates and discuss the assignment with your tutor/lecturer and you have some free consultancy service.

Get some face to face time.

Higher education is about more than just books, you also have to access a lot of people. Do your home work; yes but also get as much out of your interaction with:

Your classmates and school friends: take advantage of having many easily accessible people while you can, finding these people to help launch your start up gets harder when you are already out of campus.  Let them help you vet your idea, test your product usability and build an initial momentum for online and off line followers and supporters.

Your professors: Professors are an amazing and usually underrated resource for students.  Talk to a few trusted professors on your business model, marketing, pricing and more aspects of your business. They also have connections out they can freely introduce you to n their recommendation to your initial clients may carry more weight than you believe.

Alumni’s:  Nothing softens the heart of an alumnus like a current student of his/her former school asking for advice, one once told me “Wow I feel honored – feels like am a role model now.” He actually ended up teaching a lot about what’s out there, how I can maximize my current state and introduced me to some of my first clients and suppliers.

Take seriously entrepreneurial challenges and competitions

There is never a shortage of entrepreneurial competitions and challenges when you are at the university, many corporate sponsored competitions or those sponsored by social organizations will always come along.  Register for all you can access, practice and Pitch your business, you might land on funding if your idea is good or if you fail the exposure, connections, trainings and media time you will get will never leave you the same.

Be open to those helping you

It’s so important to be transparent when developing your business in a university setting.  Be open with those helping with your idea, chances are they will be happy to work with you for a longer time when they are free and during their holidays giving you access to man-hours you might need to seriously pay for if you were out of school already.

Keep a positive attitude to both your education and your business ideas. If you fail to fund it immediately and first join the job market, you will have a burning reason to make you work harder learn more and save as much as you can – before you know it you might be in position to fund your campus business idea and off you go  and this time with both experience and funds. 

If did like this article, please don't forget to make official our friendship and follow Business insights on Facebook

 

By Andrew Ekwang. Business writer with Business Solutions

Executing the Business Blueprint

5 Essentials to Start-up Success 

Now before you go jumping head fist into a new business venture, test drive. Test your business idea or product both online and offline to build a proven and workable business model, then execute with all your heart.  Some people are so lucky they just find themselves in the right deals at some point in time, coupled with their preparedness they crave a good business out of it. Bad news is that this is not the norm and not for everyone, for the rest of us some preparation is needed to breed that success, and lack of it may be the best explanation to the high rate of Start-up failure. So how should your blueprint execution program be like?

A business blue print is that detailed description of your business processes and systems

1 Stay Present

Establish your Start-up as a business to watch in your industry at the time of launching your business idea or product. Then get in the local and or national papers, pitch your business and products to industry related media outlets, get bloggers in and ask them to write about you – it’s not a sin provided you don’t control everything they write and keep you social media followers with fresh and engaging content.

Get all the press appearances you can handle, if you create a large enough footprint, it may intimidate your competitors and also if you this kind of person who doesn’t like being outdone (which almost everyone is) you will work hard enough to satisfy the expectations and maintain the momentum.

2 Know your customers

The most often adaptable element of a business start-up is to develop a good idea for what an ideal product is for their ideal customer, and then build this product based on the needs of most knowledgeable customer you have met.  As your clients use your product keep their needs within your sight so that they can grow for you the market base bring in new clients and re-purchase from you.

Give your service or product while testing and get active feedback from the clients.

3 Raise enough Capital 1^st time.

Raising start-up capital is difficult everyone knows that, to know how much you will need to raise first time is also not that easy but a good starting point. You will not want to run out of funds in the middle of developing your start-up product line or service provision and can’t move on from there. This normally sends you to panic and instead of concentrating on the product or service you are diverted to financing and most likely poor results, shoddy work, or defect products follow. The worst result for a start up.

4 Hire the right people

If you believe in your business model hire the people who can execute it to success. If you are in the business of selling a product or service, don’t hire sales reps who are inexperience and not knowledgeable just because they will settle for commissions only.

The right people help you to build the right product, provide the best service and hit the right footing in the market place first time. In the long run you will realize they are cheaper because they waste less time and resources.

5 Go “All-in” or “Full swing”

In the world of start-up, anytime you aren’t focused on your business is wasted time.  After your successful test drive of the idea or product, hit the market with a clear mind.

When entering a new industry either product or service, other entrepreneurs are watching your every move. The established ones want to knock you out, your followers want to learn from you and if you don’t move fast they will beat you at it, and the media review chaps want to comment on your every move to the public. Don’t give them the weapon to knock you off that early.

 Did you enjoy this article? If so don't forget to make official our friendship and follow Business insights on Facebook.