Are you passionate about your own business and feel that it can grow rapidly?
You too can be a success, but there are important things to consider before becoming an entrepreneur.
Let’s discuss some important success factors.
For starters, take the business plan. A plan helps you get to market faster by having everything clearly laid out, on paper, focused. It puts your goals, strategies and actions in black & white, there for you to tweak, refine and perfect. An important part of the business plan is ‘financials’.
It’s much easier to keep control of your affairs using financial statements, to forecast how your business is developing. The better prepared your projected financial statements, the easier it will be to manage your business.
How do you get this done?
By improving your financial skills, making you a winner for life.
Yes, you could rely on an accountant, but those accounts might not foresee a deterioration in your business, or be presented to you in a way to help you foresee trouble ahead, so you may not react in time to save your company. As a business owner you may also be confused by the accounts, which could hold you back in the long run.
Additionally there’s another crucial benefit that financial skills will bring you – effective cash flow management.
You may have heard that “Cash is King” — and in business planning that means that cash flow is one of the key factors to ensuring long-term success. Suppose you’ve created an excellent business plan with achievable targets and the ball has started rolling, then cash is needed for a huge number of things, as you build to where you want to be! And don’t forget that revenue doesn’t equal cash. As soon as most money arrives you’ll use it to pay someone else, so you need separate cash reserves.
Cash really is KING!
A company may have vast revenue, but might not be generating cash (after paying for all direct and indirect costs), thus not generating profits — in which case it could fail. It’d be a shame for that to happen, particularly if the business idea is good, but regardless of how passionate you are, if you’re not pulling in more than you’re paying out, you may as well not be in business in the first place.
This is why financial skills, including strategic financial planning, are so necessary – to help you run your business with confidence and to ensure you raise your bottom line.
We’d love to hear your thoughts on planning and cash, and their importance to your business!