I’ve been meeting with a lot of panicked business owners over the past few months and the reason they were so concerned was, quite simply, they didn’t know their numbers. As soon as I ran some webinars showing them how to put together a simple cashflow things fell more into place.
You see, the thing is, when you don’t have any certainty in your life then you get anxious. So the more certainty you can bring the better you feel. Once you start putting together some cashflow projections you can actually see what the future will look like. You can make predictions based on your current situation and get a feel for the problems (or opportunities) you might encounter.
Cashflow projections don’t predict your profit, but they do predict if or when you might run out of cash, so are incredibly useful because of that. Any money that comes out the bank (or your pocket) goes into it and any cash you get from any source goes in there too.
Let me give you an example –
You know you have no sales coming in for x number of months, so those zeros go into your spreadsheet. But you still have to pay your bills, rent, electricity, phone, wages – put them into your spreadsheet. But you’ve got a grant from the council for £10,000 because you have business premises – that’s income and again goes into your cashflow spreadsheet. You applied for the Bounce Back loan – more income to put in there. You’re getting furlough payments (for now) back from the Government, another piece of income to pop in.
Now you’re starting to build up a picture of how the cash at the bank will look over the next 6 months to a year. There are no repayments on the Bounce Back loan for a year, so nothing to enter in your spreadsheet until you start to make these.
Go back to your sales and predict how you think your sales might look after coming out of lockdown. You may already have some sales coming in, then you will have a fair idea of how much they’re down by and hopefully you’ve started to formulate some plans to increase them over time.
Once you’ve completed that go through your most recent bank statements to make sure you haven’t missed any expenses and enter your bank balance from the end of the month previous to when you started your projections. There you have it, something that will show you when you might run out of money, helping you to think about what you need to do over the coming months to survive.
You may find the situation is not as bad as you thought or it may be worse. But at least you know and then you can do something about it! As Sir John Harvey-Jones said…
“Planning is an unnatural process; it is much more fun to do something. The nicest thing about not planning is that failure comes as a complete surprise, rather than being preceded by a period of worry and depression.”
I’ve got a template for you that can help you put together a simple cashflow projection and I also recorded the webinar I ran on this at the start of the crisis. If you want to look at this and get the template make sure you join our Business Hub. It’s free for the rest of the year and there’s lots of great resources in there for you.
To join our business hub, go to https://www.businessmentoring.online/offers/PigDcZyp