I used to think that lying awake at night worrying about my cash flow and how I was going to pay the wages was what being entrepreneur was all about. Unless you’ve done it, I thought, you’ve never run a business.
After the second month though, I realised that this was a crazy way to think and there was zero fun in worrying about cash. Being an entrepreneur isn’t about taking crazy risks, it is about steady growth and managing your cash since this is the one thing you can’t run out of.
Worrying about cash is incredibly draining and time consuming. Without knowing where you are on cash, you are at the mercy of your customers who may decide to pay or not to pay.
I took a long time getting the right accountant to run my own cash forecasting. It took me 12 months. But it is such an important part of the business. I personally have daily updates on what our cash is now and where our cash is going to be at the end of a month and three months. Now, when my finance director – Paul Beswick comes in with a grave face, it is because of a problem a couple of months down the line which we can do something about. If you’ve got a cash problem tomorrow, there’s not a great deal you can do.
If you haven’t got a great accountant giving you your cash numbers either internally in your business or externally you will be at a massive disadvantage especially if your business is growing.
A growing business on the top line is no guarantee to business success, if anything you are more vulnerable to going bust because with increased sales comes an increased cash gap.
Regular cash-flow forecasts are essential to knowing where you are and not running out of cash will almost remain the most important objective in your business.
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