I regularly consult with clients on how to avoid any cashflow mistakes that could impact their businesses negatively. I almost always advise from my own past experiences and constantly revisit my own journey as an entrepreneur.
As I have written in my previous article – 10 startup mistakes to avoid at all cost, I have been in and out of starting new businesses for the past 12 years. I have launched the latest as recently as a year ago and I must say, as we’ve been working through the detail of the business plan and trying to marry that with the cashflow projections, a whole bunch of memories rushed back!
Memories of all the previous businesses I have started. What worked and what didn’t.
All the cashflow mistakes I recalled was top of mind as this by far had the greatest impact on the success or failure of the business at that time.
I remember clearly how in those early days, from pure inexperience – and maybe even an adrenaline rush so strong that it clouded all logic – I struggled to prioritize cashflow according to the most pressing matters first. Everything seemed equally important and so I also managed the cashflow accordingly. It was so easy to get swept away with a whole bunch of expenses that seemed to be critical to the operations of the business at that time. In hindsight, many of them was simply cosmetic of nature and could have been left for a later stage once the business had steady cashflow to sustain them. Or. Simply leave them out altogether!
Cashflow Mistakes Gives Sleepness Nights
At certain times, this placed the business and my personal cashflow under immense pressure and caused many sleepless nights unnecessarily. Had I not managed to rectify those oversights, it could have turned out quite nasty.
This time around however, the budget and cashflow plan was lean and mean! If something was not critical to the operations of the business, it simply did not even make it onto the spreadsheet. Monthly savings, owners salaries and tax payments have now all been included from day one. This gave us a realistic picture of the viability of the business and not only paint some pie in the sky picture that all entrepreneurs so dearly want to hold on to.
So when I came across the following infographic initially shared by Laura Entis, it was visually so on the money, that I just had to share it with our audience!
This certainly testifies to the past experiences I have shared above and shines a light on the importance of proper and conservative cashflow management as a new business.
Now this alone won’t grant you success in your new venture, but it is a critical element and one huge tick box that you can check as a step closer to ensure your dreams are materialized.
You can read the full article about cashflow mistakes here…