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5 Keys to Create a Thriving Business With Cash Flow
One of the challenges I often see when meeting solo-entrepreneurs who have been in business for less than 5 years and are trying to build a solid business is not making sure they can keep the significant amount of money they have. Earn Most people who start a business fail to understand the importance of creating and managing a budget, mainly because they don’t have a budget in their personal lives. I have recently said that “how you make money is how you do everything”.
Typically, new entrepreneurs earn and spend, sometimes without allowing the money they earn to be credited to their business account. Did you catch it? Yes, I’m talking about screwing up your business. Unfortunately, most entrepreneurs do not have a business background and often start their business out of necessity, lacking the skills, strategies and solutions to ensure they are building a thriving business. Most people live in a “feast or famine” environment, or at worst, they go from paycheck to paycheck or what I call “poor-check to poor-check” instead of allowing abundance to flow to their businesses and customers. They all do.
When you run your business this way, you will never have the freedom to enjoy what you love. In my opinion, this completely defeats the purpose of being an entrepreneur. If you are going to become a slave to your work, you might as well keep working. If this makes your stomach curl, you need to get a handle on your money so you can make sure you never have to sit behind someone else’s desk again.
If you want to succeed in your business, you need to change your mindset. Remember that with business comes boundaries. If your business is considered a business at your deepest level, you will respond accordingly. It will also take discipline. This means, you have to stop withdrawals from your business before they enter your bank account. While I’m happy to suggest that you pay yourself, I recommend that you pay yourself the honest way, through your business checking account, so that you have a record of what you’re paying yourself.
I’m happy to report that as soon as you change your mindset and you also build some key financial systems into your business, you can go from surviving to thriving in your business. When you no longer focus on lack in your business, you can attract more paying customers because your energy will flow in abundance and circulation instead of lack and stagnation.
I believe that since you start a business to make money, you should create effective systems so that whatever you earn is not squandered by poor financial management habits. Although I am not a financial advisor, I am a business coach and I can show my clients how to create basic financial management, a consistent strategy for their business as they strive to grow their business. I also recommend that you consult a financial advisor who specializes in working with entrepreneurs to ensure that you have a customized strategy that will increase cash flow and reduce stress as you try to grow your business.
Here are 5 keys to building a thriving business with cash flow:
- Know your numbers. You need to know what you are bringing in, what is going out and what is left. You should know the value of new clients to your bottom line and how many you plan to add in a given month.
- Make a monthly financial plan for your business. Set a budget for the expenses your business needs for the current month. In your plan, before you do anything to attract new clients, highlight the revenue you will have. Also track how much you’re spending so you know what your cash flow is.
- Create a strategy to attract enough new clients to cover all the expenses you already have in your business. As an example, if you need $5,000 per month to run your business and you currently have $7,500 in your business checking account, that means your business has $2,500 in cash flow. If you create a strategy to attract 3 new clients that are worth $7,500, your business will have $5,000 in cash flow at the end of the month. With extra cash flow, you can start saving money by opening a business savings account and set money aside for personal development such as hiring a business coach, making other investments, growing your team, etc.
- Purchase financial management software like QuickBooks to keep track of your expenses, income, invoicing and clients. The system is designed so you can spend more time doing what you love, working with your clients to manage your business financial system.
- Run your monthly reports up to 3rd Business day of the new month so you can see where you are and brainstorm how to increase your results by at least 10% in the new month.
Fraud is a serious crime. When you cut corners from your business, you reduce your ability to invest in yourself through your business when needed, and you’re not allowed to be fully visible to your clients. By simply creating a budget and financial plan, you can cut down on those unnecessary expenses and allow your business to truly change lives.
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