[3 Minute Read]
Financial management is the most critical aspect of every business and the responsibility of the owners and key managers. Prudent financial management is multi-faceted and includes overseeing the Balance Sheet, monitoring the Profit and Loss statement and managing cash flow. Each of these is critical to the health of an organization and is an ongoing process throughout each month.
One of the most crucial activities in financial management is managing cash flow. Cash is the most important asset and the lifeblood of any company. Cash must be managed and monitored to ensure there is an ample supply to pay operating expenses, service debt, purchase inventory, pay vendors and provide compensation to the owners. Without a solid established cash position it becomes increasingly more difficult to operate effectively and efficiency while maintaining the liquidity of the organization.
A key component of a cash flow management plan is Monthly Cash Flow Forecasting. Cash Flow Forecasting involves projecting all cash coming into the business (sales revenue, loans, investments, personal funds, A/R and grants) and all cash going out (operating expenses, loan payments, draws, merchandise, A/P, taxes, etc.). Each month will show the Beginning Cash Balance, anticipated Cash-in from all sources and Cash-out for all payments made. The result will be the forecasted amount of cash that will be available to the organization at the end of the month.
The purpose of Monthly Cash Flow Forecasting is threefold; One, the total amount of anticipated cash in and out of the company. Two, it allows a business owner or company executive to determine if there will be any shortfalls during the month, or if there is ample cash to pay all obligations. And three, if there are possible shortfalls it allows for a proactive rather than a reactive approach to finding a solution…..all before the month begins. If it’s determined there will be a shortfall of cash several strategies can be used to address this issue. They include; having a sale to generate additional cash, obtaining a loan or using a line of credit, investing personal funds on a temporary basis or delaying payments to creditors that frees cash for other areas. In short, it provides an opportunity to create a solution (proactive) rather than being “surprised” and being forced into a poor decision (reactive) that will impact the business both short and long-term.
A part of the Monthly Cash Flow Forecasting model involves tracking the actual taken Cash-in and Cash-out of the organization in each category. This provides the responsible individual with a checks and balance system of tracking the projected versus actual cash in and out and determine if there were any mistakes in the forecasting. Example, if advertising was projected to be $1,000 for the month and $3,000 was spent….why? How was this mistake made? Who is responsible for monitoring this? What can be done to avoid this in the future? This is $2,000 less that can be used in another area of the Forecasting model.
Directly below is an example of an excel spreadsheet that is used by my clients to forecast and track their cash flow and P/L each month. It’s designed to calculate all cash in and out of the business as well as the P/L with single entries. It’s very easy to use and provides one with all the information necessary to have a meaningful and informative cash flow model that can is imperative in every business.
Lastly, businesses that do not forecast their cash flow sources and expenditures decrease their chances of succeeding. Having to react under bad circumstances leads to poor decision making and increases the chances of running out of cash. And when you’re out of cash……..you’re out of business.
We can literally determine within 15 - 20 minutes, how healthy your business is. If you have a sense that you're in a dire situation, it's worth having us take a look as there may still be time to help reverse your situation. Just let us know where you need help by contacting us.
[5 Minute Read]
If you’re a business owner of one with no one to delegate your marketing task list to, you’re probably finding it extremely difficult to even get to your social media. Sound about right? This week’s write up is all about how to implement a strategic marketing program when you don’t have anyone to assist you.
We see it each and every day when working with business owners. If there are at least two people that are taking the reins of day-to-day operations, it frees up the ability to squeeze in some marketing, but if you’re solo, it’s a bit more challenging so we’re here to help you develop a way to get it all done.
Here are the 5 steps to make you a marketing rock star:
1. Determine How Much Time You Can Carve Out: In order to get things done that really matter, you need to pencil in the time needed to make it happen. If for example, you visit the doctor and you’re told you have a health issue that requires exercising or else your health will exponentially deteriorate, you find that time to hit the gym. The same goes for the health of your business. If you run your profit and loss statement and your sales are repeatedly tracking down, you will need to do something about it. There are a lot of variables, but ultimately, you most likely need to get more people walking through your door, visiting your website or calling to make a reservation. In most cases, this involves marketing, so you’ll need to find the time to make it happen. Before you do anything, determine which days and how many hours each week that you can devote to implementing your marketing. Even if it’s two hours per week, that adds up to 104 hours per year more than if you stood back and just crossed your fingers.
2. Map Out a Realistic Plan: Now it’s time to get your thinking cap on. Most businesses think of a marketing plan as something that corporate teams create or what’s required to finish up your business plan when getting a loan, but it’s just as important to have in place no matter how small your operation is. Every September, you should be updating your business goals and objectives for the following year, which then allows you to map out your marketing plan for January 2nd to help you achieve those goals. Even if you’re a super small operation, this step is vital because it’s what will keep you super organized and on budget. Devote a weekend or large block of time of at least a couple hours to map out the first round of your marketing.
3. Schedule Your Marketing Action Calendar: If you’ve selected Thursdays from 8am to 10am as your designated time to work on marketing, it’s now time to determine what needs to happen each week at that time. For example, if your business goal is successfully kicking off your Back to School shopping season, then in the months leading up to that particular campaign week or weekend, you’ll want to map out the various things needed to make that happen. If it’s a special e-blast and social media campaign, you can work on small, manageable sections of these two tasks in the two months leading up to your launch. Getting the content together and working on the pages of your website that correlate with this initiative take time, so break them into easy chunks that feel like it’s quick and easy each week and before you know it, you’ll have everything in place ready to launch.
4. Work Towards Getting 2-3 Months Ahead: Nobody likes fire drills as you typically have to pay extra rush fees, vendors may be booked up, and your quality usually goes down with your execution and your customers can many times see that you’ve cut corners. For many industries, the ultimate goal is to be working on the marketing for a particular month or season when you’re purchasing inventory. By getting 2-3 months ahead of the game, you’re now giving yourself a little more cushion that many times can be vital for maintaining your sanity.
5. Track All Your Marketing: Be sure to integrate tracking of some sort into every aspect of your marketing. Use promo codes or if you have employees on the front lines, you’ll need to hammer in the habit of always inquiring what brought customers into your business. Implementing an old school piece of paper that they can simply check off the customer’s response is all you need, but this needs to be done religiously. And always be as specific as can be, so if you’re running a Facebook ad campaign, direct mail, or influencer marketing initiative be sure to document precisely what brought that person in. And at the end of each week or month, take your tallies and insert them into the far right column of the marketing budget in your marketing tracker where you document the number of customers gained and the amount of time it took to implement that marketing tactic. By doing this consistently, you’ll be able to evaluate if and how you should continue each tactic in the future.
The bottom line is that there isn’t an easy and quick way to implement marketing, but once you get the program outlined above into place you can be super organized and efficient, especially if you repurpose the content that you’re generating. Once great video from an event can be featured on your website, used to promote next year’s event, show to sponsors or partners as to the success of the event, showcased in your next email newsletter and featured in your social media feed to just name a few.
We’re here to help, so if you’d like an objectively, strategic view on how to orchestrate your marketing program, just let us know by signing up for a strategy session or monthly coaching program.
We hope to see you soon!
Bryce & Larry enjoy sharing best practices, resources and tips to get you on the right track.
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