Are there times when you don’t have enough money in the bank account to pay the bills, wages or the ATO? Does this cause you to freak out about your cash flow?
There are several times during the business lifecycle when cash flow challenges will arise unless you have a sufficient buffer of funds in the bank to carry you through these times.
One circumstance is during periods of growth when you’re required to pay out costs before the higher revenue is received into your bank account. This could be the need to pay additional wages when the income from their work isn’t received until 30 or 60 days later.
Another circumstance is when your clients or customers delay paying their invoices to you. This frequently happens in the construction industry but can happen to anyone.
Let’s face it, cash flow challenges are part of doing business. It’s a struggle during those time periods but there are 3 steps you can take to minimise the impact of a shortage of money....
I may not be the first person to call the elephant in the room. But I am the first person to call the numbers.
Are you treating numbers like elephants in the room, where they are looking at you while you try your best to ignore them?
What is it about the numbers that freaks you out?
I’ve found the top 7 reasons why people don’t look at the numbers
This usually arises when you’re struggling; cash flow is a challenge, you’re stressed out, losing sleep at night and worrying about how to pay the wages, the rent, the bills and taxes. When times are tough, and you already know that, the last thing you want to do is look at the numbers and make yourself even more depressed when you see just how bad the situation is.
A lack of knowledge is the cause of many a case of numbers being ignored. The reality is that the vast majority...
You may have heard of Minimum Viable Product, but what is Minimum Viable Income?
Firstly, let’s identify what Minimum Viable Product is.
The Wikipedia definition is “a product with just enough features to satisfy early customers, and to provide feedback for future product development”.
What, then, is the definition of Minimum Viable Income?
I define Minimum Viable Income to be the income required to pay all expenses of the business, no more and no less. In accounting-speak it is called Break-Even.
Minimum viable income is essential when starting out in business. It is essential in those early days when you’re spending money getting started before your first sale. And then in those months when sales are starting, and you’re building the business.
Knowing your Minimum Viable Income figure becomes the very first goal in business — the goal to have sufficient income to pay all the expenses....