2023-01-03T09:12:49+11:00 David Jenyns

managing business cash flow

System Architect | Trent Taylor : teachitforward.com.au

You’ve heard it said many times before – cash is king! It is the lifeblood of any business, from big global corporations down to the small mom-and-pop stores. Like oil to a motor or oxygen to a person, cash keeps a business alive and running. Yet, one of the many difficulties small to medium-size business owners struggle with is their inability to understand and properly manage cash flow.

If you’re like many small business owners, the financial aspect of your business probably intimidates you the most. Not every business owner is a financial expert after all. The good news is you don’t need to be one to keep your cash flow in order.

Let me introduce you to a simple 7-step cash flow management process that will help you spot trends, identify leaks in your business, make accurate future projections, and keep your business financially strong. This standard operating procedure will assist you in better understanding your business, making you more cash-savvy and building your self-confidence. Once you have all this in place, you’ll never have to worry about cash ever again!

Managing Cash Flow for a Financially Strong Business

1. Check your opening balances

  • Not only do you want to know what your cash is now, you want to know what it will be on a weekly basis 6-12 months going forward. (Projected cash flow).
  • The first thing to do in your review is look in your projected cash flow what weeks going forward, your opening balances are going below your minimum cash at the bank.
  • Look for high points and low points.
  • For the ones that are not performing, trace back week by week and see where the bleeding is happening.

You want to have at least 3 actions you can do post this session to make your cash position STRONGER after undertaking the review.

The further in advance you can see, the more time you have to change things to ensure you fix them and keep a strong and growing cash at the bank.

negotiate with suppliers and work with your team

2. What expenses are you going to have?

Look at your expenses in a bit more detail and examine what changes you can make that will have a positive impact.

  • Look for patterns of expenses increasing (on the month tab) and ask questions
  • What expenses CAN you cull?
  • What expenses CAN you decrease?
  • What expenses CAN or SHOULD you increase?
  • What 3 actions should be done post this session to make your cash position STRONGER from this part of the review

Some expenses could be reduced by negotiation and asking questions of the supplier or people in the team, as to how they could be reduced or used differently.

3. Track against previous months

Look to see if you are going in the right direction or wrong direction – more often than not and understand why

  • We are looking for trends against previous months and also;
    o Did we improve on last month of THIS year?
    o Did we improve in the SAME month of LAST year?
    o How much has our cash in bank changed in the past 3 months and is it going in the right direction
  • Have you learnt from mistakes of the past?
    Focus on the “right things” to stop bleeding in certain areas, so it is not a continual “leaking” point of the business!

ensure income and and expenses are tracking against cash flow budget

4. How am I going against my budget?

A technique I often use in categories of my business that I have done poorly in, ala not met cash flow budget, highlight those particular cells with a specific colour font or highlight the cell with a colour

  • Go through 1 month and highlight in a “colour fill” the cell (say red if the income was less than the budget or if expenses were MORE than budget).
  • Do the same for the next month, but ONLY with the cells you filled from the previous month, to see if you reined in the expenses and did not do it 2 months in a row or did not go under the budget.

This section highlights and prevents you from making that same mistake again, so drill into making decisions to ensure you meet your budget the next month.

5. What assumptions have I made?

This out of all the steps is the thing you should do only 2-3 times a year when you do not understand how a certain number in the forecast was created or why an item is in there for that amount.

  • Make sure you have captured them SPECIFICALLY
  • If assumptions are done, read through a couple and if they are a bit vague or you do not understand them, ask MORE questions to make each assumption more specific

Do this more in your first 6 months of using a cash flow management, until you really start to understand your cash flow and business activities in sync better. Then the intensity of this really comes 2 months before and 1 month after the end of FY when you are resetting your business cash flow projections for the new FY.

update cash flow in advance to reflect business reality

6. Update your cash flow and make changes in advance?

As you see things that are not right or do not match what you know is going to happen in the business in reality, then update and change your cash flow in advance.

  • It could be sales you will not make or extra sales you have made that you will realise in 7 weeks time for example.
  • When you see problems or things that you NOW KNOW will not happen, take them out of the cash flow.
  • If you need things to happen in the future, put the numbers in the future weeks, BUT then highlight that box with a font colour or the cell is itself coloured, so you know and it automatically highlights to you to keep focused on this as it is not known and needs to be created.

Remember that when you adjust any of your income lines, you need to adjust the “related” expense lines as very rarely do you receive extra income, without SOME FORM of expense coming your way also.

7. Have someone external look at your cash flow!

Do this once a quarter at a minimum!

3 examples of people you could show it to, that would provide you with value and ideas to improve are;

  • Accountant
  • Business Coach
  • Mentor

The value I have received from these conversations have been;

  • They have asked me really simple questions that I have not thought of.
  • I have had to explain things I take for granted which have given me a distinction I would not have gotten from reviewing it myself.
  • I have found holes in my cash flow as when I went to explain it and teach someone else, I realised I did not know something.

As a high performance, business growth and leadership coach, I have worked with so many clients who are frustrated with the amount of time they put into their businesses yet still find themselves cash strapped. By helping them increase their self-confidence and become more financially savvy, they were able to turn their businesses around and improve their businesses’ financial health. On top of that, they now have more time for their families and enjoy the things that matter most in life.

If you need help putting together your cash flow or want to know how to gain back control of your business, book a free 20-minute strategy session with Trent here. He’ll be happy to answer any questions and help you start your way to becoming a confident, cash-savvy business owner!


System Architect Trent Taylor

Trent TaylorTrent Taylor is a global award winning business growth and leadership trainer/coach whose 2 simple rules are; 1) Be curious, and 2) be congruent (practice what you preach). He is tough on clients because they have given up on themselves at some level and one thing he will not stomach is low self-esteem and self-worth. He is also an advisor to many different businesses because he keeps it simple, talks the language of who he is talking to, keeps it fun and can see the big picture of why things are happening – quickly.

Trent has coached hundreds of businesses who are frustrated with how much time they put into the business while pulling not enough cash out and turned things around so they work less, have more time with their children and triple the cash in their business/life. He also created The Business Spine Coaching methodology which he uses himself as it has helped him live a business life where he works no more than 3 days a week, 33 weeks a year and makes a minimum of $333k of cash.

He did not have to market himself seriously for 13 years as his referral and word of mouth has provided him with more than enough business opportunities. He trained franchisees in 3 franchises to become business people as opposed to just technicians who can just deliver the product they sell. And he has advised hundreds of business owners on high performance, leadership and business groups.

Trent Taylor is a husband to a beautiful, kind and creative woman who is passionate like no other about home education of their children. He is a father to two energetic boys and his little princess daughter, who have a crack at anything and love being outdoors.

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